A new Republican bill aims to significantly increase the tax on investment income generated by large private university endowments, bringing it in line with the current corporate tax rate of 21%. Representative Troy Nehls (R-TX) is spearheading this legislation, called the Endowment Tax Fairness Act, which would represent a substantial increase from the current 1.4% tax implemented in 2017 under the Tax Cuts and Jobs Act.
Rep. Nehls argues that these wealthy institutions should not enjoy a lower tax burden than working Americans, particularly given the rising cost of tuition. He points out that while tuition rates have significantly outpaced inflation, these universities benefit from substantial endowment earnings that are taxed at a considerably lower rate. The revenue generated by this tax increase would be directed to the Treasury's General Fund to help address the national deficit.
The proposed legislation targets private colleges and universities with 500 or more students, assets valued at a minimum of $500,000 per student, and with over half of their student population residing in the United States. Institutions like Harvard, Yale, Princeton, and Columbia, which collectively hold an estimated $270 billion in assets under management, would fall under the purview of this tax.
Rep. Nehls believes this measure will hold these elite universities accountable and ensure they contribute fairly to the national tax base. If enacted, the increased tax would take effect immediately.
