New GOP bill seeks to hold private universities to same tax standard as corporations: 'On notice'
EXCLUSIVE: A GOP lawmaker is seeking to significantly raise taxes on endowment profits being banked by private universities to align their levy with the current corporate tax rate.
Many private universities have invested funds for operational use that acquire interest each year, known as an endowment. In 2017, the Trump-era Tax Cuts and Jobs Act enacted a 1.4% tax on the interest private universities were receiving from these endowments.
However, a new Republican bill would raise that tax to hold elite educational institutions to the same tax standard as corporations, which currently see a 21% corporate tax.
Rep. Troy Nehls, R-Texas, is expected to introduce legislation on Wednesday, the Endowment Tax Fairness Act, to raise the excise tax on annual private university endowment investment returns by nearly 20 percentage points, from 1.4% to 21%.
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The GOP-backed bill would then require the revenue to be deposited into the General Fund of the Treasury, a fund managing the government's budget, to be used to reduce the national deficit.
Nehls tells Fox News Digital he introduced the bill because elite universities should not have "far lower" taxes than working Americans.
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"Elite private universities have accumulated and sit on massive university endowments and pay a tax less than 2% on the investment earnings of their endowments, which is far lower than what most hardworking Americans pay in taxes. Meanwhile, these universities have significantly increased tuition for America’s youth, which has overwhelmingly surpassed the average annual inflation rate," he said.
The tax would apply to private colleges and universities that meet certain requirements, such as institutions that have 500 or more students.
Additionally, universities that would be taxed are those that aggregate fair market value of assets of at least $500,000 per student and that have more than 50% of its student body located in the United States, according to the bill.
Endowments subject to the tax, such as Harvard, Yale, Princeton and Columbia, reportedly hold a combined $270 billion of assets under management.
"This is unacceptable," Nehls told Fox. "My bill would put elite universities with massive endowments on notice by holding them to the same tax standard as corporations."
If passed, the tax would begin effective immediately after the date of the bill's enactment.