THE MASSACHUSETTS REPUBLICAN PARTY has hammered Democratic gubernatorial nominee Jay Gonzalez for not releasing details of how he would pay for an ambitious agenda that calls for new spending on education and transportation. Gonzalez has answered that with a plan — but he’s now getting hammered over the details of it.
Gonzalez is proposing a 1.6 percent tax on the endowment of all universities with holdings in excess of $1 billion. The levy would bring in an estimated $1 billion a year. Gonzalez’s campaign says it would affect nine institutions, but the majority of the tax — $563 million — would be paid by one: Harvard University, which sits on an endowment of $36 billion.
The plan represents one approach to fill in a pot of money for new spending that many Democrats were counting on from the so-called millionaires’ tax, a levy on high-earners that looked like a good bet to be approved by voters — until it was tossed off the November ballot by the Supreme Judicial Court.
Gonzalez has pledged not to propose new taxes on middle or lower-income residents. But the plan to tax big universities is not meeting anywhere near the kind of favorable reception as the idea of going after high-earning individuals.
One of the biggest problems in getting Democrats on board is that the plan is an even louder echo of a provision of the congressional Republican tax bill that was roundly condemned by Democrats. That measure calls for a 1.4 percent tax on the earnings of large endowments. Gonzalez’s proposal goes much farther, calling for a levy of 1.6 on the full value of large endowments.
Gov. Charlie Baker says he hasn’t wavered on the issue, opposing the congressional Republican plan as well as his Democratic opponent’s version of it. “I thought it was a bad idea then, and I still think it’s a bad idea,” Baker said. Joe Battenfeld says the issue is “a layup” for Baker, speculating that we’ll hear about the plan in a coming ad from the Republican governor.
The best Gonzalez seems to be getting is golf claps from leading Democrats, many of whom spoke out against the Republican plan when it was rolled out.
“She strongly supports investments in affordable education and infrastructure, believes there are a number of ways to do so, and applauds Jay for starting this conversation about ways to invest in Massachusetts,” Sen. Elizabeth Warren’s campaign said in a statement. Sen. Ed Markey took a similar tack, with a spokeswoman saying he “thanks Jay Gonzalez for starting this important discussion.”
A Globe editorial calls the proposal “a conversation starter at best,” though the paper credits Gonzalez for rolling out specifics of his revenue plan and says the issue of nonprofits contributing more to public needs is a fair one to explore.
As easy as it is to go after a Harvard, MIT, and other wealthy universities, critics point out that any hit to their coffers could be a hit to efforts to provide financial aid for lower-income families and enroll a more diverse student body — something one would imagine many Democrats support, writes Tom Keane for WBUR. A counterargument from Gonzalez that Harvard could probably afford to maintain its financial aid commitment while also helping the state meet its needs got a boost with news this morning reported by The Harvard Crimson that the university blew past a five-year capital campaign goal of raising $6.5 billion by raking in an eye-popping $9.6 billion.
Nevertheless, a recent national poll conducted for WGBH News found 50 percent of Americans opposed to taxing college endowments and 43 in favor. Democrats were more strongly opposed to the idea, with 55 percent against it compared to 47 percent of Republicans who were against the idea.
For Gonzalez, the plan answers some of the basic math questions about how he’d pay for his education and transportation agenda. But with even fellow Democrats sounding lukewarm toward the endowment tax, at best, the political question of whether it will get voters excited about his campaign seems much less clear.
