House Republicans are looking to raise excise taxes on private university endowments in President Trump’s tax bill as the administration battles with higher education.
The text of the legislative package released Tuesday shows Republicans want to increase university endowment taxes ranging from a 1.4 percent to a 21 percent increase.
For institutions like Harvard University with a student adjusted endowment of $2 million, the tax on the endowment would bump up to 21 percent.
The gains on a university endowment were never taxed before Trump’s first term in 2017 under a tax package that put a 1.4 percent rate on colleges with 500 or more tuition paying students and had $500,000 or more in endowment funds per student.
The increase in the tax would come as the Trump administration has gone to war with higher education, pulling research funding for numerous institution.
The biggest showdown has happened with Harvard when $2.2 billion in funding was paused and the university sued the administration.
In a recent letter to Harvard from Education Secretary Linda McMahon, she drew attention to the university’s massive $53 billion endowment multiple times.
“[D]espite amassing a largely tax-free $53.2 billion dollar endowment (larger than the GDP of 100 countries), receives billions of dollars of taxpayer largess each year,” McMahon wrote in the letter.
“If Harvard prefers not to change, then Harvard should have no problem using its overflowing endowment to fund its bloated bureaucracy,” the secretary wrote later in the letter.
Much of the money donated to a university’s endowment is legally designated to funding certain aspects of the university, making it difficult for a school to move around the money to areas of need if the federal government goes after a school’s funding.
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