End the Endowment Tax

Dean of the Faculty of Arts and Sciences Michael D. Smith recently said he would not commit to new long-term projects in light of a recently enacted tax on wealthy university endowments which would have required Harvard to pay an estimated $43 million to the federal government in fiscal year 2017. We reaffirm our view that this tax is an attack on higher education that is unprecedented in American history. Now, Smith’s announcement provides the first indication that the bill may have devastating ramifications for University programming.

In recent memory, tax exemptions for higher education have been uncontroversial and popular. It is only quite recently that bills such as the Tax Cuts and Jobs Act of 2017 have required leaders of higher education to justify why their universities’ high endowments should go untaxed. It was previously understood that the programs that Harvard’s endowment funds are vital not only to the University but also to the country and the world.

A $43 million budget could prevent Harvard from providing necessary initiatives to help its students. Financial aid, for example, is largely funded by Harvard’s endowment and therefore could be impacted by the tax increase. The redistribution of wealth facilitated by the tax bill takes financial resources meant for hardworking students and gives them to billionaires, something that is fundamentally unfair. As a result, the University should do everything in its power to preserve financial aid as well as diversity and inclusion programs to counter this affront to students on financial aid.

Aside from the injustices students will face as a result of the tax, the policy also does a disservice to the broader national and global community. Spending reductions caused by the endowment tax could likely prevent the University from funding groundbreaking and necessary research, stifling vital medical breakthroughs and technological developments.

Furthermore, this attack on higher education is unprecedentedly partisan. Republican attacks against institutions like Harvard score easy political points with its conservative base. Taxing the Harvard endowment to fund tax cuts may be politically savvy, but it is certainly socially undesirable. The policy fundamentally prioritizes wealthy individual taxpayers above the larger public good.

The endowment tax is a calculated disregard for the important role of research in American society at a time when even facts are under constant attack by our leaders. As the University and its students continues to use its clout and influence to advocate for the reversal of this tax, we urge Congress to reconsider its merits. The work that our universities do is too important to be taxed to oblivion.

This staff editorial solely represents the majority view of The Crimson Editorial Board. It is the product of discussions at regular Editorial Board meetings. In order to ensure the impartiality of our journalism, Crimson editors who choose to opine and vote at these meetings are not involved in the reporting of articles on similar topics.