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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, November 9, 2017

House GOP Bill Reduces Number Of Colleges Impacted By Proposed 1.4% Endowment Tax From 140 To 70

Tax Cuts And Jobs ActFollowing up on Friday's post, List Of 140 Colleges With Endowments Greater Than $100,000 Per Student That Would Be Subject To GOP's Proposed 1.4% Tax On Investment Income:  Washington Post, House GOP Trims Total of Colleges Targeted For New Endowment Tax:

House Republicans have slashed the number of colleges they are targeting for a new tax on endowment income.

The GOP majority on the Ways and Means Committee voted Monday night to modify a tax bill that includes several provisions affecting higher education. Among them is a proposal that makes college presidents blanch: an excise tax on endowment income for certain private colleges.

Under the first version of the bill, made public last week, private colleges would have been subject to a 1.4 percent tax on net investment income if they had 500 or more students and an endowment of at least $100,000 per full-time student. A Chronicle of Higher Education analysis found that about 140 schools would have been affected. The American Council on Education estimated the number affected as 155.

Now the total of targeted schools has been cut by more than half.

The amendment from Ways and Means Chairman Kevin Brady (R-Tex.), approved on a party-line vote, would raise the wealth threshold for colleges subject to the tax to an endowment of $250,000 or more per full-time student. That would leave roughly 60 to 70 schools potentially subject to the tax, from Ivy League universities such as Princeton and Harvard to smaller schools such as Oberlin College and College of the Ozarks.

http://taxprof.typepad.com/taxprof_blog/2017/11/gop-reduces-number-of-colleges-affected-by-14-tax-on-endowment-investment-income-from-140-to-70.html

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Comments

Let's hope this tax passes and encourages donors to give to less well-endowed universities. I can never understand why anyone would want to add the Harvard's huge pile anyway.

Posted by: Michael W. Perry | Nov 10, 2017 6:52:16 AM

Seems reasonable. The principle-preserving return on $100,000 is about $4000. For $250,000 it is about $10,000, or about the annual tuition of many state universities. Once they hit that level of endowment income, taxing it seems legit and fair.

Posted by: PhysicsProf | Nov 10, 2017 9:03:31 AM

This isn't about revenue. It's about consolidating power.

Universities can credibly say that Republicans are wrong about a wide range of issues. Think tanks living on donations are beholden to right wing donors and can't be honest or credible.

Republicans hate the idea of knowledge and truth getting in the way of their power.

So Republicans are trying to damage universities any way they can.

Posted by: Power-mad republicans | Nov 10, 2017 2:09:51 PM

"Universities can credibly say that Republicans are wrong about a wide range of issues. "
If the universities actually were credible critics I would have more respect for them. But today they are mostly dominated by an bunch of marxist identity politics obsessed loons.

Posted by: richard40 | Nov 12, 2017 1:51:08 PM