GOP Targets Ivy League Endowments in New Budget Crackdown

Clear Facts

• House Republicans are proposing a significant tax increase on elite universities’ endowment profits as part of a broader tax bill.
• The proposed tax structure is tiered, with universities having higher endowment per student ratios facing higher tax rates.
• The initiative aims to generate substantial revenue to support tax priorities and address concerns about university policies.

In a bold move targeting the financial strongholds of America’s elite universities, House Republicans are seeking to impose higher taxes on the substantial endowment profits of these institutions. This proposal is part of an ambitious tax reform, often referred to as “one big, beautiful bill.”

The House Ways and Means Committee has unveiled a tax bill that introduces a tiered tax structure based on the endowment per student ratio of universities. This approach could potentially generate tens of billions of dollars in revenue over the next decade. The funds are intended to support tax priorities, addressing concerns about university practices, including issues of antisemitism and the promotion of certain ideologies on campuses.

Under the proposed plan, universities with endowments valued between $500,000 and $750,000 per student would continue to pay the existing 1.4% tax on annual investment income. However, institutions with endowments valued under $1.25 million per student would face a 7% tax rate, and those with endowments between $1.25 million and $2 million per student would see a 14% rate.

For universities with endowments exceeding $2 million per student, the tax rate would jump to 21%. This aligns with a proposed act that suggested a similar 21% tax on universities with endowments valued at $500,000 per student or greater.

“I’m pleased the primary provisions of my bill are included in the House Ways and Means reconciliation proposal,” expressed a representative.
“I am proud to have led this effort and applaud the hard work and leadership involved. Every day, we are one step closer to delivering this significant bill. Let’s get it done and do some good for the American people.”

Notably, prestigious institutions such as Princeton University, Yale University, Stanford University, Massachusetts Institute of Technology, and Harvard University had endowment per student ratios above $2 million in fiscal year 2022. These universities would likely be subject to the highest 21% tax rate on their annual investment income if the provision is enacted.

The tax-writing committee is set to begin marking up the bill, signaling the start of a potentially transformative shift in how elite universities manage their financial resources.

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