In our March 31 Multistate Tax Update, we addressed a Connecticut legislation that would have taxed the endowment funds of independent institutions of higher education when the aggregate sum is $10 billion or more at the end of the taxable year. Yale, with its $25.6 billion fund, was the only institution to which this would have applied.
Now, just weeks after lawmakers announced their plan, Bloomberg reported that they dropped it, for lack of support. According to Bloomberg, Yale stated in a statement that the legislation was “a step backward [that] would diminish Yale’s ability to invest in the community and discourage faculty from launching companies (or staying in New Haven). It is ultimately an attack on nonprofit colleges and universities that are among the best assets in Connecticut.”
In late March, Florida’s Gov. Rick Scott stirred up additional controversy when he invited Yale to relocate to the Sunshine State, promising that he would not raise taxes on the endowment.
Less controversial was the Connecticut legislature’s related bill that would impose a tax on certain colleges’ commercial property that generates at least $6,000 in annual revenue. Last week, the Finance, Revenue and Bonding Committee voted 28 to 22 in its favor.