Zoe Berg, Photo Editor

Yale has spent the past two years quietly lobbying against a tax on its endowment income, per an analysis of lobbying disclosures.

The 2017 Tax Cut and Jobs Act includes a provision that places a 1.4 percent tax rate on investment income for universities with endowments whose value rises to $500,000 per student. Yale, along with Princeton, Harvard and the University of Pennsylvania, has spent the past two years quietly lobbying members of Congress to pass a separate bill, HR 4438, that would repeal this tax. The University argues that the endowment tax pulls money from funds raised for teaching, scholarship and student aid. But supporters of the tax act claim that the University has sufficient funding, as its endowment is the second largest of any university, and was most recently valued at $31.2 billion.

“Yale, like the nearly 40 colleges, universities and medical schools subject to the tax on investment income, opposed the tax when Congress enacted it in 2017,” Richard Jacob, Yale’s associate vice president for federal and state relations, told the News. “The tax represents a troubling departure from long-standing federal policy of not taxing the proceeds from gifts that are used to support charitable activities related to teaching and scholarship. Moreover, the tax advances no meaningful policy goal — it does not make college more affordable nor does it increase the pace of research being conducted on campuses subject to the tax.”

Charles Skorina, an investment executive recruiter who has researched the Yale endowment, said that he supports the University’s efforts to repeal the tax. The tax is “basically a penalty on donating to your school,” Skorina said. He added that by taxing university endowments, which institutions rely on to fund student aid, financial support is indirectly endangered.

The tax is “a way of tak[ing] money from anyone and anything that looks like it’s got a lot,” Skorina said.

But Craig Birckhead-Morton ’24, a member of Yale Young Democratic Socialists for America, disputed the notion that the University’s ability to provide aid is imperiled by the tax.”

Birckhead-Morton said that the University currently fails to provide the necessary financial support for those in need, while it also has “the money to go around.” He pointed in particular to the federal aid Congress gave Yale during the pandemic, as well as the accumulation of wealth in the endowment — which Yale hopes to increase by $7 billion through its most recent fundraising campaign.

Explaining the origins of the tax, Skorina described the measure as “populist,” saying that “there were a group of politicians [who said] ‘Well, this is a big pot of money, and it’s just that schools shouldn’t have it for some reason. And therefore, let’s tax these donations to schools.’”

Law professor Zachary Liscow LAW ’15, an expert in tax law, echoed Skorina, saying that the decision to impose the tax in 2017 is partially influenced by anti-elitism and populism within the Republican Party. But he added that the tax is also grounded in the need to offset the increased debt incurred by the cut in the corporate tax rate also included in the 2017 Tax Cut and Jobs Act.

Skorina warned of the tax’s potential long term impacts, both for the University and the country. He suggested that once a tax is added to the code, it is much easier for it to grow to where it would have a depressive effect on donations to the University.

“Every tax is smaller to begin with,” he said. “The objective of politicians is to get the tax on the books, because once you get on the books, it’s a lot easier to expand it.”

Birckhead-Morton disagreed with Skorina’s analysis, saying that the “trickle-down” view of the University’s accumulation of wealth is “certainly not the case.”

He had a different view of the long term effects the tax might have.

“Obviously avoiding paying taxes is a huge thing,” Birckhead-Morton said. And given the nature of local, statewide and national budget deficits, as well as the need to fund programs at all those levels, “it’s really important that Yale pays its fair share of taxes,” he said.

Jacob told the News that the endowment is central to everything that the University does, from funding research to enabling Yale to be the “lowest cost choice, after student aid, for middle-class families.”

He further added that the endowment is crucial in Yale’s engagement with and support of the local community.

“[The endowment] also enabled Yale to avoid layoffs while campus was largely closed, and it allowed Yale to continue to be an economic anchor for New Haven and Connecticut, with a statewide economic impact exceeding $6 billion annually,” Jacob wrote in an email to the News.

But Birckhead-Morton said that Yale has not sufficiently utilized its endowment to support the local community. Last week, community members and Yale students timed a protest to coincide with the University’s launch of its fundraising campaign. 

Birckhead-Morton further argued that the burden of economic recovery from the last year of economic hardship should fall more on wealthy institutions like Yale than on those less wealthy.

He said that Yale’s lobbying on this issue fits into his broader perspective of the University as a “pseudo-corporation.”

Despite his personal opposition to the tax, Skorina said it was highly unlikely that the University would be successful in its lobbying efforts. He pointed to the present political environment, saying that no current member of Congress is seriously considering a cut on taxes, especially on wealthy institutions.

Yale spent $170,000 lobbying during the most recent quarter.

Philip Mousavizadeh covers Woodbridge Hall, the President's Office. He previously covered the Jackson Institute. He is a sophomore in Trumbull College studying Ethics, Politics, and Economics