By Bob Katzen
Bill#(H 1617) – Imposes an excise tax on private universities that have an endowment fund in excess of $1 billion. The tax would be 2.5 percent of the institution’s funds that exceed $1 billion. The bill earmarks the revenue for subsidizing the cost of higher education, early education and childcare for lower-income and middle-class residents. Current state law exempts nonprofit institutions, including universities, from paying property taxes.
Supporters of the tax say it could raise millions of dollars and noted it is unfair that these schools are not paying taxes on these huge endowments. They note that these institutions operate like large wealthy corporations and enjoy many of the advantages and benefits the state provides.
Some opponents say that many schools already pay their host communities millions of dollars under the voluntary Payment in Lieu of Taxes (PILOT) program that encourages institutions to provide money to their host communities through a wide variety of ways ranging from outright cash payments to scholarships for local students. Others say the tax is unconstitutional and could hurt the Bay State’s image as the leader in higher education. Some expressed concern that the funds, although “earmarked” for these educational purposes might end up in the General Fund.