Connecticut’s budget for the 2017 fiscal year was $19.8 billion. By comparison, in the same year, Yale’s endowment stood at $27.2 billion and its expenses at around $3.5 billion.
Responding to Yale’s seemingly disproportionate economic might, one Republican gubernatorial candidate is calling for taxation of Yale’s endowment as a means of securing revenue for the cash-strapped state. There is currently no state endowment tax in Connecticut, although the federal tax law signed by President Donald Trump earlier this year will tax large university endowments, including Yale’s.
“I’m not anti-institution,” said Bob Stefanowski in a visit to the Wallingford Republican town committee last Wednesday, according to the Hartford Courant. “But again, in a state with a $350 million budget deficit, these schools have to pay their fair share.”
Stefanowski is a former business executive who most recently worked as the CEO of DFC Global, an international financial services company. Stefanowski has also worked in high-level executive positions for both UBS Financial Services Inc. and General Electric.
He is also one of many businessmen competing in the Republican primary, along with candidates such as Steve Obsitnik, Michael Handler and David Stemerman. No other Republican gubernatorial candidates have made public comments about the possibility of taxing Yale’s endowment.
Pat Trueman, campaign manager for Stefanowski, declined to comment, referring the News to the comments he made Monday in the Courant, saying Stefanowski wants equitable tax policy “across the board.”
Gary Rose, a professor of government and politics at Sacred Heart University, said Stefanowski may be promoting the tax proposal to separate himself from the crowded Republican field.
“He’s appealing to people who feel Yale has had too much of a cushion,” he said. “It’s a Trumpian type of approach where an outside business guy is coming in to shake things up.”
While Stefanowski is one of the first Republicans to voice his support for such a plan, state Democrats have previously proposed legislation effectively designed to tax Yale. A March 2016 bill proposed levying a 7 percent tax on the earnings of endowments in the state valued at over $10 billion — a marker that only Yale surpasses.
This bill, which garnered national attention, had the support of Senate President Pro Tempore Martin Looney, D-New Haven, and Appropriations Committee Co-chair Toni Walker, D-New Haven, but it was ultimately shut down by Malloy.
Still, proposals for taxing Yale have continued to gain traction as the cash-strapped state searches for additional revenue. New Haven Mayor Toni Harp and a majority of alders voiced their support for the 2016 proposal. Harp also stated during a 2016 press conference that the economic conditions of the state might necessitate some form of an endowment tax.
Stefanowski echoed similar sentiments at the Wednesday meeting. “This state is hurting, so everybody is going to have to chip in and pay some of the freight here,” he said.
Proposals to tax Yale would likely generate millions in revenue for the state. Besides the endowment, Yale owns around $2.5 billion of untaxed property in New Haven and has assets in other locations statewide.
Yale has long opposed proposals to tax the University’s endowment.
“Yale is dismayed that any civic leader would consider taxing nonprofits in Connecticut,” said Karen Peart, director of external communications for the University’s Office of Public Affairs. “Growing the economy is one of the most urgent challenges for the state, and strong colleges and universities are essential for a growing economy that adds well-paid jobs.”
Peart also noted that Yale is one of the top five taxpayers in New Haven and pays real estate taxes on its community investment redevelopment properties.
Yale has previously argued that it contributes to the community in the form of the social good it does in the Elm City. Yale employs thousands of New Haven workers and provides a variety of different funding and outreach programs in the city, including an annual $8.2 million gift and scholarships for city students.
It is also unclear whether such a tax would comply with the U.S. Constitution. When the 2016 measure was introduced, Yale representatives threatened to sue and declared the tax unconstitutional, citing the 1819 Supreme Court case Dartmouth College v. Woodward, which affirms that a university charter should be “protected from impairment by the state.”
Conor Johnson | firstname.lastname@example.org