Our Opinion: Tax gimmicks aren't a substitute for reform
Democratic gubernatorial candidate Jay Gonzalez has developed some attractive proposals regarding education, transportation, infrastructure, preschool affordability and other topics designed to bolster his appeal to voters. Considering that his campaign to unseat incumbent Republican Gov. Charlie Baker faces a steep uphill climb, the emphasis on meat-and-potatoes issues makes sense. What does not make sense, however, is his attempt to instigate class warfare as a means to pay for those dreams.
Evoking the ill-fated "millionaires' tax," which sought to levy a 6 percent state tax surcharge on income exceeding $1 million (and which was struck from the ballot by the Supreme Judicial Court last June), Mr. Gonzalez has set his sights on the seemingly well-off by focusing upon the jewels in the Bay State's educational crown: its world-class private institutions of higher learning (Eagle, Sept.20).
By suggesting that "ordinary people" would not mind imposing a 1.6 percent tax on historically tax-exempt colleges and universities whose endowments exceed $1 billion each, he has chosen an "us against them" path that is as counterproductive as it is inaccurate. It also echoes a regrettable provision of the congressional Republican tax law calling for a 1.4 percent tax on the earnings of large endowments.
Mr. Gonzalez targeted heavyweights like Harvard and the Massachusetts Institute of Technology, but he also included three schools in Western Massachusetts among the nine he has singled out — Amherst College, Smith College and Berkshire County's Williams College.
According to the Association of Independent Colleges and Universities in Massachusetts, its 55 member institutions educate almost 150,000 Bay State residents per year while employing more than 100,000 people. Equally important is the $608 million in financial aid they award to undergraduates.
It is misleading to group the "big nine" schools with fat-cat corporations simply because they have large endowments; dividends from those endowment monies are plowed not into shareholders' pockets but into infrastructure, capital improvements, research, salaries and financial aid. Williams, for example, maintains a "need-blind" admissions policy — the ability to accept the most qualified students without concern for their financial resources. Harvard has considered going tuition-free — one step further, even, than Mr. Gonzalez's proposal to provide debt-free education.
All this is possible thanks to generous endowments, which have been able to prosper thanks to their tax-exempt status.
Massachusetts' constellation of colleges and universities comprise an enviable collective resource. Their graduates and the products of their research nourish the Bay State's economy, particularly in the high-tech sector. Students from around the globe vie to attend them, making their own individual contributions to an already vibrant state culture. Above all, they are not enemies of "ordinary people," as Mr. Gonzalez calls those he would pit against them. Instead, they educate them.
While such gimmicks as this proposal and the "millionaires' tax" might attract some votes in the short term, what the commonwealth really needs are more dependable, dedicated revenue sources to reach its goals. A gas tax increase, for example, would fund improvements to roads, bridges and a creaking transportation system. Spreading the burden proportionally among the many, rather than penalizing those that happen to perform their function with excellence, is the only just and sensible way to finance state operations.
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