Republicans are looking for ways to subsidize tax cuts for billionaires, and one likely target is endowments of colleges and universities. This move is an extension of Trump’s war against elite higher education, especially Harvard.
In Trump’s 2017 tax bill, he levied a tax of 1.4% on institutions of higher education with large endowments, relative to their enrollments. Current Republican thinking is a huge increase in that tax.
Be it noted that endowments fund scholarships for low-income students. The proposed taxes are mean-spirited and short-sighted.
Endowments valued at $750,000 or less per student would be taxed at the current 1.4 percent rate, according to two of those people. Endowments valued between $750,000 to $1million per student would be taxed at a 10 percent rate and those greater than $1 million per student would be taxed at a 20 percent rate…
Under Trump’s 2017 tax bill, only universities with more than 500 students and endowment assets surpassing $500,000 per student face the current 1.4 percent tax. Ways and Means Republicans have considered both bumping up that tax rate significantly and applying it to a broader mix of U.S. colleges.
A menu of policies prepared by the House Budget Committee and obtained by POLITICO in January suggested bumping up the endowment tax to 14 percent. That would raise $10 billion over 10 years, according to the document.
One bill, introduced by Rep. Troy Nehls (R-Texas), would raise the excise tax on endowment profits up to 21 percent.
Diane Ravitch's blog 
It is just an another way to slowly and steadily bring education in the United States at all levels to down on its collective knees so that Republicans can keep marching in the direction of privatization. Corporations want the big bucks that go into education. This tax increase on the endowments is also just another way to cover the tax cut that will eventually be given to the wealthy.
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Exactly right.
Republicans need to impose more taxes to pay for renewing the tax cuts for the top income people. Like Elon musk.
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Thank you for the post. I had not realized that university endowments are being taxed 1.4%. I thought that they were not taxed at all!
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In the past, university endowments were not taxed. Everyone understood that they provided a cushion of fiscal stability and a source for scholarships.
Trump imposed the 1.4% tax in his 2017 tax legislation as a punitive measure. It doesn’t affect all colleges and universities but those that have $500,000 in their endowment per student. That singles out the best universities. Now the plan is to impose a large tax and to tax even more universities.
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Elite research universities should be paying local taxes. Municipalities in which these research universities are located end up losing a lot of their tax base when the universities gobble up properties and K-12 education suffers. I was surprised to read that Columbia University in New York doesn’t currently pay the 1.4% tax. The Republican plan to exclude foreign students from the calculation could end up with a number of negative consequences. A lot of universities have stayed afloat because of tuition paying foreign students. The country is enriched culturally by their presence. If you have a list of the research universities that do pay the tax, please post. So far, google has not been helpful in my search for a list of universities that do pay the tax.
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Some nonprofits pay taxes voluntarily.
I recall that the Ford Foundation voluntarily pays real estate taxes on its prime property on East 42 in NYC.
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Imagine an endowment of $50+ billion. Another with $45 billion. Yet another with $40 billion. I suspect educating students is a mere side hussle for some of these institutions of higher learning!
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There is nothing unethical about having a large endowment. The interest in the endowment allows universities to give large scholarships, to make college tuition-free for students from low-and moderate-income homes. No kne, including the president, the trustees, or the faculty uses the endowment as a slush fund for their personal use.
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At a time when total student loan debt in the U.S. is approaching $2 trillion, it is relevant to ask how endowment funds are invested. Follow the money!
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Couple of things: the word is hustle, and is so spelled “h-u-s-t-l-e.” And it’s clear that you don’t understand the concept, nature, and use of endowments.
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Please help me understand. Mr Trump implies that he is levying the tax? Am I correct in understanding that he alone doesn’t levy this tax but rather the People – The Congress decides to Levy a tax, impose a tax, etc. So while Mr. Trump likes to make things like a big deal that he is doing, in this case he is only making a recommendation to the People’s House, the Legislature. Correct? Therefore, Mr. Trump is just blowing smoke! Now it is up to the Legislature to decide if they want to face the Voters in November 2026 if they levy this tax that will screw over people. Is my thinking correct. I continue to believe that the enemy of the People is the Republican’s in Congress rather than Trump.
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William,
You are correct. Only Congress can levy taxes.
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Can a non-profit be taxed?
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Trump wants to strip colleges of their tax-exempt status.
He hates higher education because so many well educated people know he is a fraud
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Wouldn’t it be great if the churches were all taxed just like the rest of the country?
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