In the current tough economy, where the value of the dollar is dropping and prices are steadily rising, the state of Massachusetts is looking to squeeze some money out of its one pride and joy — Harvard University.

The Wall Street Journal reports that Massachusetts legislators are studying a plan to levy a 2.5% annual tax on the college endowments that exceed $1 billion dollars. Harvard has the nation's largest cache at $35 billion. So based on the recent size of Harvard's endowment, the university would have to shell out more than $840 million annually.

Here's how Harvard professor Greg Mankiw responsed on his blog: move Harvard the hell out of Massachusetts! He proposes to first start a satellite campus of Harvard in another state, than gradually turn the satellite into the main campus and eventually close down the Massachusetts campus.

Drastic? Yes. But crazy? Maybe not. $840 million a year is a lot of money to lose, which could be used on valuable resources for students. And this goes beyond the walls of Harvard–what if other states start to follow suit and use such proposals as a way to generate state revenue? What if states even start to cut more funding to state schools, which don't have other private sources of funding?

The country (and even the world) watches Harvard–and if the state attempts to squeeze money out of the university it could have consequences for other schools as well.