A Conservative Case Against the Endowment Tax

Remember when a Republican president said, “Read my Lips: No New Taxes”? Or when 231 Republican members of Congress signed a pledge to oppose any and all tax increases?

Oh, how times have changed.

About two weeks ago, Republican Congressman Mike V. Lawler (R-N.Y.) proposed raising the tax on college endowments from 1.4 percent to 10 percent. Prominent party members like Vice President J.D. Vance have encouraged these sorts of proposals as a means of stripping universities of funds used for DEI programs and “woke insanity.” And Harvard, with the largest endowment of any school in the world — $53 billion to be precise — would be particularly affected.

I don’t just oppose this tax because I’m a Harvard student; I oppose it because it's hypocritical. Endowment taxes betray the small-government, conservative values that Republicans claim to uphold.

Anyone who’s taken intro to microeconomics knows that the incidence of this endowment tax could very well fall on students and their families in the form of higher tuition prices and reduced financial aid. In other words, the tax wouldn’t just impact Harvard. By limiting the University’s ability to pay for financial aid, the tax’s cost would likely be paid for — at least in part — by students.

In practice, low-income families who do not have the means to pay for college without financial aid could suffer as highly motivated and gifted students would be unable to access resources they could use to realize their economic potential.

Higher education generates positive externalities — it creates the highly skilled and productive workforce that forms the foundation of advanced economies. As a result, all of us benefit. Levying an endowment tax on elite universities is akin to shooting ourselves in the foot economically.

And ideologically, conservatives’ sudden urge to impose higher taxes is incoherent. And it’s not just endowments; today’s Republicans are much more supportive of indirect, hidden taxes — like tariffs — than Republicans of the past.

Conservatives believe in lower taxes because we believe in the private sector. Government spending is generally wasteful and inefficient, constrained by bureaucracy, and insulated from competition. By reducing the tax burden for the average American, we can give money back to the people, allowing them to spend it directly on what they need, rather than what the government thinks they need.

New indirect taxes — like the endowment tax — represent an ideological betrayal of the laissez-faire ideals that form the backbone of American conservatism. They compromise the Republican Party’s claim to stand for fiscal responsibility and economic growth.

Instead of being guided by smart policy solutions, conservative tax policy has become yet another arena for the culture war. The proposed endowment tax might appease members of the Trumpian base who wish to undermine and punish institutions that they see as leftist strongholds, like universities. But, if implemented, it will come with grave economic consequences.

We’ve seen this playbook before. It’s the same strategy as previous policies like the State and Local Tax deduction cap, which Republican lawmakers seemed to implement in order to punish higher tax blue states.

This convoluted mess of a platform is creating a disjointed, chaotic, and frankly uncredible economic program. There is no rhyme or reason behind it; it does not represent a clear blueprint for how the party is going to improve the economy or rid the government of Democratic excess.

It should be obvious. But raising taxes, on endowments or otherwise, is the antithesis of conservatism.

Henry F. Haidar ’28, a Crimson Editorial editor, lives in Wigglesworth Hall