{shortcode-eaaf874a75bf6eb62b76881b42e47cd26d3d87b4}

Harvard and more than 30 other colleges and universities jointly submitted their formal opposition to the United States Treasury’s proposed rules for levying a tax on some universities’ endowments that was originally passed into law in December 2017.

The comments — addressed to U.S. Secretary of the Treasury Steven T. Mnuchin — detailed issues the schools have with the guidance surrounding filing the endowment tax. In a letter accompanying the 32-page comments document, the signatories warn that the tax will hinder their ability to “promote excellence” in academics and award financial aid.

“We remain opposed to this damaging and unprecedented tax that will not only reduce resources available to colleges and universities to promote excellence in teaching and to sustain innovative research, but also to increase access for low and moderate-income families through financial aid,” the letter read.

The proposed endowment tax rules — released more than a year after its passage — specify that universities with at least 500 tuition-paying students and total assets of at least $500,000 per student are subject to the excise tax on their investment returns.

The endowment tax has already begun to have an effect on Harvard’s finances.

In a Tuesday Faculty of Arts and Sciences meeting, Dean for Administration and Finances Leslie A. Kirwan ’79 said the University had to withdraw roughly $10 million from the FAS endowment to make their first payment.

Harvard’s endowment, which totals $40.9 billion, clocks in as the largest university endowment in the world.

The endowment tax has long been a lobbying point for Harvard’s leaders. Even before the Republican-led tax law was passed in 2017, University administrators challenged the provision. In the months after its passage, former University President Drew G. Faust and current President Lawrence S. Bacow stressed the negative impacts it would have on the University, including limiting research, financial aid, and public programs.

Harvard’s comments Tuesday attempt to distinguish colleges and universities from private foundations, who were already subject to a similar excise tax before the 2017 law passed. They argue that the Treasury must make revisions to better reflect the differences between such institutions.

The changes proposed in the comments include an amendment to the definition of a student, which currently stipulates that students must be “enrolled and attending” and may exclude non-credential-seeking students. The change would increase the effective number of students at Harvard and other universities, decreasing the value of assets per student and potentially reducing the number of endowments subject to the tax.

The comments also suggest excluding certain categories of income from the Internal Revenue Service’s definition of net investment income, the portion of the endowment subject to the 1.4 percent excise tax. The comments argue that “student loan interest, rental income from certain student, faculty, and staff housing, and royalties derived from an educational institution’s educational or research function” should be exempt from the tax.

The signatories also note in the comments that the new rules could force universities to unnecessarily pay taxes on money earned or received prior to the date of the enactment of the tax, on certain new donations, and on money made from “core educational and research functions.”

The signatories closed their letter by calling their comments “thoughtful, constructive” feedback.

“While not every issue is a priority for each of us, we strongly believe these comments provide thoughtful, constructive feedback to the proposed rules in a way that will reduce unnecessary administrative burden and respond to the unique characteristics of colleges and universities,” they wrote.

Correction: Oct. 4, 2019

A previous version of this article incorrectly stated that Harvard's comments were directed toward Congress. In fact, the comments were directed toward the Treasury.

—Staff writer Alexandra A. Chaidez can be reached at alexandra.chaidez@thecrimson.com. Follow her on Twitter @a_achaidez.

—Staff writer Cindy H. Zhang can be reached at cindy.zhang@thecrimson.com.​​​​