MIDDLEBURY, Vt. – Middlebury President Laurie Patton has joined fellow higher college presidents in signing a letter seeking repeal of a provision in the 2017 tax act that would impose a 1.4 percent excise tax on endowments of private colleges and universities with more than 500 students and net assets of at least $500,000 per student.
The March 7 letter, which describes the new tax as “unprecedented and damaging,” is addressed to Republican and Democratic leaders of the House and Senate. It is signed by 49 institutions including Harvard, Stanford, and Yale, as well as fellow NESCAC schools Amherst, Bowdoin, Colby, Hamilton, Trinity, and Williams. The tax would not currently apply to Middlebury, whose endowment is below the $500,000-per-student threshold.
“We write together to express our deep objections to Section 4968 of P.L. 115- 97, the Tax Cuts and Jobs Act, which will impose an unprecedented and damaging tax on the charitable resources at our and other American colleges and universities,” the letter states. “We urge Congress to repeal or amend the tax to preserve resources that support students, teaching, and research.”
The letter seeks to dispel the idea that endowments are held in reserve as rainy day funds, when in fact institutions rely on their endowments to support a host of operational expenses each year.
“Students are the leading beneficiary of these resources with each of us committed to significant efforts to enhance affordability. Yet this tax will not address the cost of college or student indebtedness, as some have tried to suggest. Instead, it will constrain the resources available to the very institutions that lead the nation in reducing, if not eliminating, the costs for low- and middle-income students, and will impede the efforts of other institutions striving to grow their endowments for this very purpose.”
Read the full letter here.