Letter to the Editor: Proposed Tax Would Undermine Massachusetts’ Education, Innovation Ecosystem

To the Editor,

Jay Gonzalez’s recent op-ed in The Crimson seeks to defend a severely misguided tax proposal to the very community it would harm. The truth is that the elimination of tax-exempt status for nine Massachusetts college and universities would have far-reaching and negative consequences for students, research, and the state’s knowledge-based economy.

Harvard’s tax exempt status reflects its sole commitment to a non-profit education and research mission that is directly supported by private donations to Harvard’s endowment over centuries. For Mr. Gonzalez to call his proposal “modest” and “fair” shows a lack of understanding of how endowments work and how these resources directly enable our academic community to advance our mission and its public good. Nowhere is that more evident than in support for financial aid, which Mr. Gonzalez blithely dismisses.

One hundred percent of Harvard College students can graduate debt free. All aid at Harvard College is given on the basis of need. The University’s commitment to expanding access and affordability means that families with an annual income of less than $65,000 pay nothing toward the total cost of their child’s education, while families with incomes between $65,000 and $150,000 contribute no more than 10 percent of their income.

In this past fiscal year, Harvard invested $191 million in undergraduate financial aid. That path to a debt-free college education, open to every student at the College, is enabled by the endowment that Mr. Gonzalez seeks to tax by more than $550 million in the first year.

Mr. Gonzalez also inaccurately labels nonprofit status as a “subsidy” and fails to recognize the financial and programmatic impacts of colleges and universities at the local level. Harvard pays taxes on property it owns that is not used for academic purposes and has a long tradition of making voluntary payments-in-lieu-of taxes to its host communities. In the last decade, payments to the cities of Boston and Cambridge alone totaled more than $177 million and are complemented by hundreds of mission-based community benefit programs.

Colleges and universities are tax exempt for a reason. They expand knowledge, not for commercial gain, but for the benefit of society by making possible new discoveries, spawning new companies and creating new jobs. The medical breakthroughs, the scientific innovation, the museums, and community programs that are abundant throughout our region are testament to a deliberate policy. This is exactly why China, for example, is heavily investing in higher education, recognizing that it is a proven way to advance their economy and create better lives for their citizens. This proposed endowment tax would be a step back and would directly undermine Massachusetts’ strong higher education sector and all that it enables.

Thomas J. Hollister is the University's Chief Financial Officer and Vice President of Finance.