To All Members of the Yale Community,
Earlier today, the U.S. House of Representatives passed legislation that proposes to raise the tax on the investment income of Yale and a number of other universities from 1.4% to 21%. Each year, this increased endowment tax would strip from Yale’s budget hundreds of millions of dollars that currently fund financial aid, research, scholarship, and teaching.
This legislation presents a greater threat to Yale than any other bill in memory. Today, I ask you to join me in defending the research that saves lives and keeps America competitive, the faculty who enrich minds and help us make sense of our complex world, and the students who keep our future bright. What is at stake is Yale’s ability to offer financial aid, to contribute to the vitality of our nation’s culture and civic life, and to introduce discoveries and innovations that transform the world.
Yale is fortunate to have a large endowment, which contributes one-third of the university’s total revenue, and nearly two-thirds of the revenue outside of the medical school. The endowment is the single largest source of revenue for Yale and is far greater than tuition. It enables Yale to provide, this year alone, $564 million in financial aid for students across all schools, $432 million for life-saving and groundbreaking research, and $415 million for faculty teaching and salaries in the arts, humanities, sciences, and social sciences. It enables Yale to be New Haven’s largest employer and an economic anchor that generates $8 billion annually for the state’s economy. You can learn more about Yale’s impact.
The endowment tax is not the only provision in the legislation affecting universities; other provisions would affect student aid, but the steep tax represents the greatest challenge for Yale and our community. If this tax increase is enacted, Yale’s ability to lead and innovate across all fields will be greatly reduced, and the scale of Yale’s impact on humanity will be diminished. The tax also threatens Yale’s longstanding commitment to affordability, which allows Yale to meet all admitted undergraduates’ full financial need without resorting to student loans. Around 85% graduate debt free. Yale is currently tuition free in general to those with family incomes under $150,000 a year.
The coming few weeks are critical, as this bill will be debated and potentially amended in the Senate. If the Senate approves the bill with modifications from its current version, the Senate and House will need to reconcile any differences before the bill becomes law. We have a window to advocate for the importance of the research, scholarship, and teaching taking place at Yale and peer universities. I urge you to write and call your senators and urge them to reject an increase in the endowment tax, and I urge you to encourage others to do the same.
Please share the following important information with your representatives in the Senate and House:
- The endowment tax places more financial burden on students by making college less affordable. Taxing schools reduces the revenue available for financial aid.
- Schools manage endowments responsibly. Yale spends aggressively from its endowment to support financial aid and research. We spend a quarter of the endowment’s total value every five to six years.
- The endowment tax will undermine the country’s global leadership in technology.
- Universities perform fundamental research that has led to advancements that define modern life, including MRI, GPS, the internet, smartphones, and artificial intelligence, to name just a few.
- University research will drive the next generation of innovation, such as quantum computing, that will be critically important to the economy and national security.
- If the endowment tax increase is enacted, America’s great research universities will have less impact and become less able to educate the next generation of innovators, and the U.S. will cede leadership in new technologies to other countries.
I have been working, alongside scores of other university presidents, to share these messages with elected officials to remind them of the central role that Yale and peer universities play in building a highly capable workforce and making the discoveries that strengthen the nation’s economy, competitiveness, and security. I assure you that I will not stop working on this issue until it is settled.
Right now, each of us must make the case for what universities contribute and for what is at stake if we fall behind as a nation in education, research, and scholarship. Join me in sharing what Yale gave all of us and what Yale continues to give our country and the world.
Sincerely,
Maurie McInnis
President
Professor of the History of Art