State Rep. Paul Kujawski (D-Webster) withdrew an amendment proposal Tuesday for an endowment tax on colleges and universities with an excess of $1 billion in endowment funds.
The idea for a 2.5 percent tax on all endowment funds exceeding $1 billion was proposed as an amendment to the House budget for fiscal year 2010.
‘The proposal has large, obvious flaws and the potential for severely negative unintended consequences,’ Boston University President Robert Brown said in a brief email exchange.
Private universities are considered nonprofit organizations and are therefore exempt from paying property taxes. As such, legislators on Beacon Hill, such as Rep. Angelo Scaccia (D-Boston), are eager to generate revenue by taxing these ‘fat cats,’ according to a State House News Service summary of Tuesday’s House session. Scaccia repeatedly voiced his objections to Kujawski’s withdrawal, arguing that private universities are taking a free ride.
Although BU’s endowment briefly exceeded the billion dollar mark at the conclusion of fiscal year 2008 on June 30 with $1.1 billion, that total has fallen 28.7 percent in the first three quarters of fiscal year 2009, BU Chief Investment Officer Pam Peedin told The Daily Free Press earlier this month. As such, BU would not be subject to this tax.
Neither Kujawski nor Scaccia were available for comment at press time.
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