Tag: Taxes

  • Yale expects layoffs as leaders brace for $300M in endowment taxes

    Yale expects layoffs as leaders brace for $300M in endowment taxes

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    Dive Brief:

    • Yale University is bracing for layoffs as it prepares to pay the government hundreds of millions of dollars in endowment income taxes.
    • In a public message, senior leaders at the Ivy League institution said that Yale’s schools plan to take steps such as delaying hiring and reducing travel spending to save money. But they warned workforce cuts were on the horizon. 
    • “Layoffs may be necessary” in some units where cutting open positions and other reductions are insufficient, the university officials said. They expect to complete any downsizing by the end of 2026 barring “additional significant financial changes.”

    Dive Insight:

    One of Yale’s top financial headaches is the higher endowment tax rate passed by Republicans this summer in their massive spending and tax law. The increased tax — which is much lower than what House Republicans initially proposed — will have an upper tier of 8% on the investment income of the wealthiest endowments, up from the current rate of 1.4% established during the first Trump administration. 

    That new 8% tax bracket includes Yale, in Connecticut. As of June 30, the end of the 2025 fiscal year, its endowment’s net assets totaled $44.2 billion in value after it allocated $2.1 billion to the university for student aid, teaching, research and other functions that year. 

    The tax hike means Yale will be paying the government around $300 million a year starting in 2026, officials said. 

    “To illustrate its scale, this new expense exceeds our yearly budget for undergraduate financial aid,” the senior leaders — Provost Scott Strobel, CFO Stephen Murphy and Senior Vice President for Operations Geoffrey Chatas — said in their message Wednesday. They noted the amount is also larger than the combined annual budget of more than half of Yale’s 15 schools. 

    Additionally, the leaders pointed to the Trump administration’s efforts to limit federal funding for research overhead costs and overall spending on research. “Cuts to these crucial funding sources would pose a significant threat to research conducted across the university,” they said. 

    While four major federal agencies have attempted to cap reimbursement for research overhead, federal courts have blocked those efforts so far. However, some of those rulings are under appeal. 

    For now, though, the university’s grant and contract income remains robust at $1.3 billion in fiscal 2025, up nearly 7% from the year before.

    As they prepare for new financial pressures ahead, Yale officials are instituting austerity measures, as many other universities are as they navigate financial disruption under the Trump administration and a Republican Congress. 

    Earlier in the year, the university paused hiring, deferred building projects, cut nonsalary expenses by 5% and offered early retirement buyouts to administrative staff. But the looming endowment tax and federal funding uncertainty will mean steeper cuts, the senior leaders said. Schools and units are currently ironing out their budgets.

    “As units implement their plans, our community can expect to see additional organizational, service, and program changes,” the senior leaders said. “While some of these adjustments will occur in the coming months, we anticipate they will continue over the next two years.” 

    In explaining the need for workforce cuts, they pointed out that nearly two-thirds of Yale’s expenses are tied to compensation and benefits for employees.  

    “We are hopeful that most reductions can be accomplished by eliminating open positions and through regular turnover and retirement incentives,” the officials said.

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  • Recipe for Science Superpower? “Pay Your Taxes With Pride”

    Recipe for Science Superpower? “Pay Your Taxes With Pride”

    Denmark’s world-leading success in commercializing research should not be written off as a one-off confined to the country’s booming weight loss drug industry, a Nobel-winning scientist has argued.

    Since Novo Nordisk’s diabetes treatment Ozempic was sold as weight-loss drug Wegovy, the Danish biotech company has quickly grown into one of the world’s biggest companies and Denmark’s largest single corporate taxpayer, contributing almost $4 billion in corporate taxes in the year ending March 2025—about half of the country’s total corporate take.

    A further $3.8 billion in income taxes—which can reach up to 56 percent for higher earners—was also collected from Novo Nordisk staff in 2024.

    That success has led to major interest in how Denmark’s model of combined strong fundamental and applied research paid off so spectacularly and whether it can be replicated, although some pundits have wondered whether the serendipitous discovery of Ozempic—whose roots lie in research on snake venom—represents a one-shot for its industrial science sector.

    Speaking to Times Higher Education, however, the Nobel laureate Morten Meldal, who is professor of chemistry at the University of Copenhagen, said Novo Nordisk’s story should not be seen as an outlier in Danish research but one of many prosperous science-based companies based in the country of just six million people.

    “Novo Nordisk is the result of Denmark’s system—its success is directly attributable to how our society operates: We have high taxes, but those taxes result in huge tax-exempt industrial foundations funding science and creating opportunities for both academic and industrial success. That is why Novo Nordisk happened in Denmark,” said Meldal, who won the Nobel Prize for chemistry in 2022.

    While Novo Nordisk—whose $570 billion valuation last year was famously larger than Denmark’s entire GDP—has captured the interest of research policymakers, it should be understood in a wider context of sustained investment in research from industry, he added.

    “Look at Novozymes, Maersk, Carlsberg—if you consider how much our companies invest in research, it is far more than the government. Novo Nordisk has the blockbuster product now, but it arrived within the context of our system—there are lots of companies doing well by commercializing research.”

    Noting the advances made by U.S.-based Eli Lilly, which has two medications—Mounjaro and Zepbound—approved for use by American regulators, Meldal predicted that Novo Nordisk’s undisputed advantage in this area will eventually be eroded. But Denmark’s system will produce other big science success stories, said the biochemist, who leads the synthesis group in the chemistry department at the Carlsberg Laboratory.

    “We have won so much with Novo Nordisk, but its scientific success is the rule, not the exception,” he said, underlining the importance of basic research to create the opportunities of tomorrow.

    Denmark’s success in research has an even simpler root, continued Meldal, who was speaking at the annual Lindau Nobel Laureate Meeting held in southern Germany last month.

    “The best investment that any country can make is education; the payback on this is huge, and that allows for other investments, such as science. To do this you need our high-tax system and a government dedicated to long-term success of the entire society,” he said.

    “My advice to any country who wants Denmark’s system of science is simple: Pay your taxes with joy and ask for return on investment for the community.”

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