Harvard University to pay $50 million in new taxes on endowment, other revenues

Harvard University

The Widener Library on the campus of Harvard University. (AP Photo/Steven Senne, File)AP

New federal taxes levied on Harvard University, including on its $41 billion endowment endowment, will cost the Ivy League college $50 million, according to Harvard’s annual financial report released Thursday.

The new tax burdens are part of the Tax Cuts and Jobs Act of 2017, signed into law by President Donald Trump. Roughly $37.7 million in taxes are assessed from the college’s investments — referred to as an endowment tax — as part of the 2017 tax reform law.

The remainder, some $12.1 million, from the new taxes were derived from “net investments on operational revenues, changes to unrelated business taxable income ... and excise taxes on executive compensation."

Altogether, the taxes represent about 1 percent of revenues.

“This new burden is equal to approximately 1 percent of revenues, or viewed in the context of maintaining affordability, less money is now available for university to maintain financial aid, which totaled $193 million for undergraduates this year,” the report reads.

Harvard joins more than 30 other colleges that have jointly opposed the 2017 tax package, writing in a letter to the U.S. Secretary of the Treasury Steven T. Mnuchin that the changes natively impact academics and the colleges’ ability to award financial aid, the Harvard Crimson reports.

The Boston Business Journal reported in January that top Massachusetts colleges have been seeing sizable endowment gains in recent years. Boston University and MIT reported increases of 16 percent and 11 percent during the fiscal year that ended June 30, 2018. That year, Harvard’s endowment grew by about 10 percent.

Harvard University ended fiscal year 2019 with an operating surplus of $298 million — about $100 more than it had the prior fiscal year, according to Harvard’s financial report. College officials say roughly $1.9 billion of its endowment goes towards its operating budget.

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