Democratic gubernatorial candidate Jay Gonzalez is proposing that the state tax college endowments for the first time, his approach to raising additional funds for transportation and education.
Under his campaign proposal, a 1.6 percent would be levied on such endowments bigger than $1 billion. Nine nonprofit schools currently exempt from taxation, including Harvard, MIT and Williams, would have to pay the tax. Gonzalez estimated $1 billion would flow into state coffers each year.
"This investment will put us on a path to fully funding our public schools to ensure that every student has access to a great education regardless of where they live," Gonzalez said, standing near the Harvard Square T stop.
"This investment will help us make our public universities and colleges affordable and debt-free for any resident eligible to attend, allowing them to pursue their career ambitions and contribute to our economic growth without being saddled with huge student loans," he added.
It is unclear how much public support exists in Massachusetts for taxing college endowments. But a WGBH News survey of 1,002 Americans across the country found 50 percent oppose the idea, while 43 percent support it.
The results break down along party lines. Fifty-five percent of Democrats believe endowments should not be taxed, while Republicans are deeply divided on the issue.
"Among Republicans, 46 percent believe endowments should be taxed. Forty-seven percent believe they should not be taxed, " said Seth Brohinsky, a project director with Abt Associates, which conducted the poll.
Independents are most likely to support a tax on college endowments, with 49 percent saying it's a good idea. Younger Americans and people living in the East were most likely to support taxing college endowments. The poll, conducted Aug. 21-25, has a margin of error of 3.5 percent.
WGBH News asked the question because this year for the first time the federal government is imposing a 1.4 percent tax on the investment returns of the largest college endowments. The provision was included in the Republican tax bill Congress passed and President Trump signed in December.
College leaders strongly oppose federal or state taxes on endowments. Thirty-five schools, including Harvard, MIT, Amherst, Williams, Wellesley and Smith in Massachusetts, are already on the hook for millions of dollars under the new federal tax.
Harvard's new president, Larry Bacow, told WGBH News taxing college endowments, as a matter of public policy, is a "terrible idea."
"If we want to make college more affordable, taxing the resources that support financial aid makes no sense whatsoever," Bacow said last week, stating in general terms his reaction to the new federal tax.
In a statement, Richard Doherty, president of the Association of Independent Colleges and Universities of Massachusetts, said taxing endowments is bad for students and the state's economy.
"Massachusetts has the finest colleges and universities in the country," Doherty said. "Through their educational and research missions, these nonprofit institutions are drivers of our knowledge-based economy and provide the public good of a higher education, along with thousands of jobs and billions in spending, all at a tremendous savings to the Massachusetts taxpayer."
On Wednesday, Gonzalez dismissed critics as well as national poll results showing a lack of support for taxing nonprofit colleges.
"I'm proposing this because I think it is a fair way to address really critical needs in this state," Gonzalez said, adding that he also supports the new federal tax on college endowments. "These institutions have been able to accumulate enormous wealth because of the fact that they are exempt from taxation."
If approved by the Legislature, Gonzalez said, Massachusetts would be a leader on taxing endowments. No other state taxes colleges and universities.
WGBH Radio's Esteban Bustillos contributed to this report.
Our higher education reports are a collaboration with The Forum for the Future of Higher Education and made possible with support from Lumina Foundation and the Davis Educational Foundation.
