Activists of UMass-Amherst Young Democratic Socialists of America (YDSA), Amherst College YDSA, Hampshire College YDSA and PHENOM joined forces to call on Massachusetts’ richest universities like Amherst College pay their fair share with a tax on their endowments.
The bill which we rallied to support, known as the Endowment Tax Act (H.2824), would levy a 2.5 percent tax on any university’s endowment that is over $1 billion.
Although a college degree remains key to well-paying jobs and higher quality of life, it has become increasingly out of reach for everyone but Massachusetts’ wealthiest due to ever-rising tuition costs and crippling debt students have taken on to get their degrees.
As states like Massachusetts have given less and less funding to its public universities like UMass Amherst – which are the engines of their economies and help keep residents in the state – they have adapted by putting the burden on students with higher tuitions every year.
These public universities have also resorted to over admitting and causing overcrowding (which then drives up housing prices, as if students weren’t already paying enough).
Meanwhile, elite private universities like Harvard University are richer than ever, as their endowments have risen to record highs since the pandemic.
But what gives these elite universities the right to hoard all that money in the first place? Sure, private universities do depend on money from their endowments to provide for their students. Furthermore, these universities argue we should not tax their endowments because they support the public good.
But do they? Harvard’s fortune is larger than multiple countries but they only admit 1400 undergraduates a year, serving a privileged few rather than the public. As critics have pointed out, with its $51 billion endowment Harvard could make a second university and educate double the students. But they choose not to since it would make them less exclusive.
As of 2023, Harvard’s endowment is nearly $51 billion. On the other hand, for over 70,000 students, the entire University of Massachusetts system has a measly $1.4 billion (as of 2023). Likewise, Amherst College has a roughly $3 billion endowment. This is more than twice the amount of the entire UMass system, which serves roughly 70 times more students. With 1970 students, Amherst College’s endowment pencils out to $1.9 million per student.
It would be one thing if these universities used their endowments to educate as many students as possible, but they’re not. As education experts have pointed out, elite universities obsess over exclusivity and single-digit admission rates, which means educating a tiny portion of the population, and at that the richest part of it.
Granted, colleges like Harvard do educate a solid amount of lower-income and middle-class students. But due to how small universities like Harvard are relative to how much money they have, public universities like UMass Amherst end up educating countless more. These students are also more likely to remain in Massachusetts and give back to our economy.
So if they cannot use their fortunes for the public good, it is only reasonable that these elite, exclusionary universities give a sliver of their gluttonously high endowments towards colleges that actually educate most Massachusetts students.
This means levying a 2.5 percent excise tax on the endowments of private Massachusetts universities with more than $1 billion endowments. This includes Amherst College, Williams College, Harvard University, Tufts University, Boston University, Boston College, Smith College, Northeastern University, and MIT, among others.
The tax revenue would be put into a fund that would be used directly for public education, from pre-K up until higher Ed. It has been well documented that funding for public education, especially higher ed, has severely declined in the past few decades, decreasing over 30% since 2001.
The endowment tax, if passed, would be pocket change for Harvard and other universities with endowments over $1 billion. This is not to mention the negative effects of many such universities on their surrounding cities as they cause gentrification, divide neighborhoods, and drain municipal services while paying no property taxes.
Massachusetts must eventually address these other injustices, but this Endowment Tax is a first step towards making Massachusetts’ elite colleges live up to their professed goal of serving the public good.
More Press:
https://amherststudent.com/article/students-rally-for-endowment-tax-bill/
https://amherststudent.com/article/its-time-to-pay-it-forward/