After Republicans ‘” Big, Beautiful Bill” passed the House and is now headed to the Senate, colleges and universities will likely have to pay more in taxes on their assets.
Despite some studies suggesting officials had hired lobbyists to try to lower the plan, observers believe that these institutions are likely to experience a tax increase.
House Republicans propose increasing taxes on personal university scholarships from 1.4 pct to 21 percent, according to the policy.
According to a statement from Republicans on the House Ways and Means Committee, the law would keep “woke, wealthy colleges that operate more like big businesses” guilty and prevent them from abusing the good benefits offered by the tax code.
According to the New York Times, the tax “would be stacked based on the size of the school’s endowment and enrollment, with a top rate of 21 percent for those with endowments of at least$ 2 million per student.”
Endowments between$ 750, 000 and$ 1.25 million per student would be taxed at a 7 percent rate, while those between$ 1.2 million and$ 1.2 million would be taxed at 14 percent, and those under the$ 200,000 threshold would be taxed at 21 percent.
According to calculations recently published in the Chronicle of Higher Education,” [S]everal institutions with large endowments — Harvard, Yale, Stanford, and Princeton Universities, and the Massachusetts Institute of Technology — would now face significantly higher tax bills, ranging from$ 400 million to$ 850 million per year.”
Rep. Jason Smith, R-Mo., chairman of the House Ways and Means Committee, praised the program on X, saying:” For too long, colleges have received valuable treatment from our tax code while disregarding the interests of citizens.”
However, not all policy experts agree that tax increases are beneficial.
In a recent telephone interview, Neil McCluskey of the libertarian CATO Institute claimed that the government should not be raising taxes. The bill also treats universities differently from other groups in this country.
Republicans don’t like them, he said, noting that only elite institutions are targeted by the bill.
McCluskey stated in a piece he wrote for CATO on May 20 that “people should never be punished based on their political beliefs.” But it is obvious what House Republicans are doing when they refer to the “woke” target groups of their tax as.
Jonathan Williams, vice president of Pomona College, reported to the New York Times that the tax increase will be shouldered by tuition increases:” This will shift the cost of tuition squarely on to families.”
However, conservative analyst Peter Roff in Washington, D.C., argued that paying taxes on endowments is unjustifiable.
The hectoring, lecturing, pinheaded elites at all the so-called finer schools, who have spent years getting fat and being academically lazy, sitting on billion-dollar endowments, are about to receive a long overdue comeuppance, he told The College Fix in an email.
He claimed that these institutions should be subject to the same level of taxation as large corporations, adding that he believes they “eventually will be”.
He said,” If not this year, then sometime in the future.”
In 2024, prominent Republicans were already pushing to tax universities ‘ endowments, claiming that because they use their considerable resources to promote “woke” biases, they don’t deserve their tax-exempt statuses.
In fact, the College Endowment Accountability Act was a proposal made by Ohio Senator JD Vance at the time. He appears to have made his idea come to be more of a reality in his capacity as vice president.
MORE: GOP lawmakers attempt to defray the massive endowments of’woke’ private universities
Congressional Building in Washington, D.C. IMAGE: Shutterstock
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