Republicans in the House have included a major hike in the endowment tax in their sweeping tax and spending legislation.
The text of the tax portion of the legislative bill, released Tuesday by the House Ways and Means Committee, raises the tax on the earnings of the largest university endowments to 21%, bringing it in line with the corporate tax rate.
The 2017 Tax Cuts and Jobs Act, also known as the Trump tax cuts, imposed an excise tax of 1.4% on the investment income of universities and colleges with endowment assets exceeding $500,000 per student.
House Republicans are moving to raise the rate for schools with even larger endowments, all the way up to 21% for those with student-adjusted endowments of $2 million. Religious universities would be exempted, as would state schools.
The provision is one of several revenue-raisers that were included in the House Ways and Means Committee’s reconciliation text. Reconciliation is a legislative process that allows bills to bypass the filibuster and pass with only a simple majority in the Senate. Republicans hope to use reconciliation to enact much of President Donald Trump’s tax-and-spending agenda, especially by making permanent the 2017 tax cuts.
The bill would also raise the excise tax on certain private foundations, to as high as 10% for those with over $5 billion in assets.
Hiking the endowment tax has become increasingly popular among some conservatives and Republican lawmakers on Capitol Hill. They argue that college campuses have become overrun by left-wing radicalism.
Rep. Troy Nehls (R-TX) authored a standalone bill to raise the tax from 1.4% to 21%. He said earlier this year that he was pushing for the measure to be included in reconciliation.
“I love it. We should do it,” Nehls told the Washington Examiner back in March when asked about raising taxes on college endowments.
His legislation would raise an estimated $70 billion over 10 years for the treasury. Those revenues would be used to offset tax cuts elsewhere in the legislation.
HOUSE RELEASES TAX CUT BILL TEXT WITH TEMPORARY $2,500 CHILD CREDIT
The Trump administration and congressional Republicans have challenged colleges and universities in other ways as well.
For instance, the administration announced it would withhold $400 million from Columbia University over accusations that the school has facilitated antisemitism. It paused $175 million in grants to the University of Pennsylvania over its transgender policies and stopped $800 million in U.S. Agency for International Development grants to Johns Hopkins University.