Along with 48 other college presidents, President Clayton Rose signed a letter to Congress at the beginning of March, calling for a repeal or amendment of the recently-passed tax code, which imposes a 1.4 percent tax on certain college endowments. The updated code, which passed in December, requires all private colleges and universities with endowments greater than $500,000 per student to pay the tax on new earnings each year.
“Some significant part of the motivation for this tax is generated by the animus that some parts of our country have towards selective institutions of higher learning,” Rose said. “There’s no question about that. In this political moment we’re in, [there is] the notion that there’s a perceived political agenda on these campuses.”
The letter, dated March 7 and addressed to eight legislators from both parties, argues that the endowment tax will hurt the ability of colleges to give financial aid and support students and faculty.
“[T]his tax will not address the cost of college or student indebtedness, as some have tried to suggest,” the letter reads. “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.”
The National Association of Independent Colleges and Universities estimated in December that 30 colleges and universities, including Bowdoin, would currently be affected by the tax, although that number would grow if endowments continue to perform well.
Supporters of the endowment tax, such as Representative Tom Reed (R-NY), argue that the tax is important as a form of transparency. Among Maine’s senators, Susan Collins voted in favor of the bill that included the endowment tax, while Angus King voted against it.
Rose noted that Bowdoin will do its best to provide financial aid in spite of the tax.
“We’re going to continue to raise money for financial aid,” Rose said. “It’s a central piece of who we are.”