New GOP Bill Seeks Private Universities to Apply Same Tax Standards as Corporations: ‘With Notice’
EXCLUSIVE: A GOP lawmaker seeks to significantly increase taxes on endowment earnings that bankers private universities in order to bring their tax into line with the current corporate tax rate.
Many private universities have invested funds for operational use that earn interest each year, known as an endowment. In 2017, the Trump-era Tax Cuts and Jobs Act imposed a 1.4% tax on the interest private universities received from those donations.
However, the new Republican bill would increase that tax to hold elite educational institutions to the same tax standard as corporations, which currently have a 21% corporate tax rate.
Rep. Troy Nehls, R-Texas, is expected to introduce legislation on Wednesday, the Foundation Tax Fairness Act, to raise excise taxes on annual returns to private university endowments by nearly 20 percentage points, from 1.4% to 21%.
Rep. Troy Nehls, R-Texas (Nathan Posner/File)
The GOP-backed bill then it would require the proceeds to be deposited into the Treasury’s General Fund, the fund that manages the national budget, to be used to reduce the national deficit.
Nehls told Fox News Digital that he introduced the bill because elite universities should not be taxed “far lower” than working Americans.
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“Elite private universities have accumulated and rest on huge university endowments and pay less than 2% tax on their endowments’ investment earnings, far below what most hard-working Americans pay in taxes. Meanwhile, these universities have significantly increased tuition for America’s youth, which has largely exceeded the average annual inflation rate,” he said.
tax it would apply to private colleges and universities that meet certain conditions, such as institutions with 500 or more students.
Harvard University (Maddie Meyer/File)
Additionally, universities that would be taxed are those that aggregate a fair market value of assets of at least $500,000 per student and that have more than 50% of the student body in the United States, according to the bill.
Taxable foundations such as Harvard, Yale, Princeton and Columbia reportedly hold a combined $270 billion in assets under management.
“This is unacceptable,” Nehls told Fox. “My bill would caution elite universities with huge endowments by holding them to the same tax standard as corporations.”
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If passed, the tax would go into effect immediately after the law’s enactment date.
