The Hiller Instinct: Taxing colleges

Richard Doherty, President, Association of Independent Colleges & Universities in Massachusetts
"I think there is a misperception that colleges do not pay any taxes, and in fact, nothing could be further from the truth."

Every college has an endowment, which is like an individual's investments. Nine colleges in Massachusetts have endowments of more than a billion dollars. Harvard, with 34 billion, is number one in the state and the nation. M.I.T., with nearly ten billion, is number two state-wide, and sixth nationally. Boston College's endowment is one point six billion and Boston University's is one point one.

At the state house this year, for the first time, legislators considered taxing those huge endowments, to raise 1.5 billion annually. The proposal failed.

Richard Doherty, President, Association of Independent Colleges & Universities in Massachusetts
"That was a direct recognition of the tremendous contribution that the colleges and universities make to the economy of the commonwealth."

The President of the Association of Independent Colleges and Universities in Massachusetts points out what its 58 members do pay: five billion dollars in salaries to 90,000 employees and three hundred fifty million dollars in financial aid to Massachusetts students. And, property taxes on any buildings they own that aren't used for education. That makes M.I.T. the biggest taxpayer in Cambridge and Williams College number one in Williamstown.

Some schools also give the cities where they're located a payment in lieu of taxes, called a pilot. Boston, for example, gets 4.3 million a year from B.U., 1.8 million from Harvard, but just 260,000 dollars from B.C.

Mayor Thomas Menino, (D) Boston
"There are all kinds of questions about financial situations of the universities, but as Mayor of Boston I look for the benefits that they give us."

Mayor Menino says colleges can contribute everything from substitute teachers to summer jobs without it showing up on a tax bill.

Mayor Thomas Menino, (D) Boston
"Can they do more? They probably can do more. We'll be looking at that issue in the future."

I hear what the schools say, but I also see the squeeze on services. I think wealthy colleges will become just like wealthy taxpayers--too tempting a target for desperate lawmakers to ignore. But if colleges are taxed more, they'll give less for free... because nothing is free.

I'm Andy Hiller, and that's my instinct.

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