After an uproar from media outlets and government officials over a bill purportedly proposing to tax Yale’s endowment, it seems such an action will never come to fruition.
Endowments are stockpiles of money donated to institutions of higher education.
Yale’s endowment grew by $2.6 billion in 2015 and totals $25.6 billion.
The bill introduced by Connecticut Democrats proposes the taxing of “unspent earnings of university endowments with more than $10 billion in assets,” according to The Wall Street Journal. Seen as a reaction to a $900 million state deficit, the bill is actually somewhat toothless, as Yale could subtract its total operating expenses and not face a tax.
“This is theoretically meant to give Yale an option: It can either ‘expand access to education and create innovative jobs’ by spending down more of its money pile, or ‘share a small percentage of their retained earnings with the state’s taxpayers,’” Slate magazine writes. “However, the legislators seem to have neglected the fact that Yale already spends more each year than it adds to its endowment (after all, they have to do something with all their tuition revenue). From 2014 to 2015, for instance, its operating expenses amounted to $3.2 billion.”
Florida Gov. Rick Scott — a man who has sought out Connecticut businesses in the past — offered “business-friendly” Florida up for Yale’s use.
“We would welcome a world-renowned university like Yale to our state and I can commit that we will not raise taxes on their endowment,” Scott said during a press conference.
This prompted a response from Connecticut governor Dannel Malloy’s office.
“Many proposals are put forward during the legislative session and many stay as just that – proposals,” said Malloy spokesperson Devon Puglia. “We value Yale, the students it educates, the research and innovation it generates, and the neighborhoods it strengthens in New Haven. As the governor has made clear, we don’t believe that new taxes should be part of our solution as Connecticut adjusts to a new economic reality. Instead, we should make the spending reductions necessary for living within our means.”
It seems Malloy would veto any such bill, although that hasn’t stopped New Haven State Senator/Senate Pro Tempore Martin Looney from speaking out in favor of such a measure.
“It is our hope that these rich schools can use their wealth to create job opportunities, rather than simply to get richer,” Looney said, adding that schools like Yale could “share a small percentage of their retained earnings with the state’s taxpayers, so that we could accomplish these same goals.”
For Yale’s part, the school seems to be loyal to the state of Connecticut.
“It’s wonderful to be recognized as an outstanding asset, but Yale, New Haven, and Connecticut have been on common ground to great mutual benefit for 300 years,” said Yale spokesman Tom Conroy. “We’re looking forward to reaching even greater heights in education, research and civic engagement over the next three centuries and more.”
Texas Governor Rick Perry has made overtures to Connecticut businesses before. With General Electric leaving Fairfield, Connecticut for Boston, the idea of company migration has become attractive to Republican governors.
Ultimately, this is much ado about nothing, since Yale’s endowment will not be taxed and the university will remain as a Connecticut educational staple.
Sten Spinella is a senior staff writer for The Daily Campus. He can be reached via email firstname.lastname@example.org.