I have great admiration for George Mitchell as a statesman, but regarding the impact of the new tax on university endowments, he is wrong (“Taxing college endowments will make higher education less affordable,” Opinion, March 2). An excise tax of 1.4 percent on the investment earnings of colleges with more than $500,000 of endowment per student (there are only about 35 such institutions) is not going to make college less affordable for anyone.
This new tax may be bad policy, but for a college with a $1 billion endowment and an 8 percent return in a particular year, it amounts to just $1.12 million of the $80 million in investment proceeds.
Yet even with $78,880,000 of new money, Mitchell wants us to believe that the $1.12 million lost in taxes will make that college less affordable. To whom? No low-income students will be denied admission as a consequence.
We don’t help bolster higher education’s image with the American public by automatically closing ranks any time we see even the hint of a gray cloud on the horizon. Higher education has many legitimate issues. The endowment excise tax is not one of them.