Republican Politicians Attempt to Tax Private Universities’ Endowments
Jose Nino
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Leading Republicans in the United States Congress are advancing a new strategy to tax universities’ endowments, contending the institutions don’t merit having tax-exempt statuses due to how they use their large endowments money to advance “woke” causes.
Although initial efforts in Congress appear to be gridlocked for the time being, watchdog organizations have warned higher education leaders that this strategy has only just kicked off.
“With ongoing public interest and concerns about the value and cost of a college education, some lawmakers are aiming to garner voter support for their scrutiny of higher education business practices,” declared the National Association of College and University Business Officers in a policy memo that was recently published.
The association singled out legislation put forward by Arkansas Senator Tom Cotton and Ohio Senator J.D. Vance in December, both who used the word “woke” in boosting their legislative push.
Vance’s legislative proposal, the College Endowment Accountability Act, aims to “raise the excise tax on endowment net investment income from 1.4 percent to 35 percent for secular, private colleges and universities with at least $10 billion in assets under management,” per his office.
In a post published on X, Vance declared that the universities use their lavish, tax-exempt endowments “to push DEI and woke insanity.”
Cotton’s bill is entitled the ‘‘Woke Endowment Security Tax Act of 2023.” It aims to impose a 6% excise tax on the endowments of 10 American universities, as a press release from his office highlighted.
On December 14, 2023, Vance’s bill was blocked on the floor of the US Senate.
Before that action, the Republican senator had contended that university endowments “have grown incredibly large on the backs of subsidies from the taxpayers.”
He alluded to three universities specifically — Harvard University, Massachusetts Institute of Technology, and University of Pennsylvania — that have endowments close to $100 billion. This figure is almost on par with several of the largest hedge funds in the nation.
“It must stop because it has enabled political insanity. It must stop because it has burdened an entire generation of Americans with over one trillion dollars of student debt, student debt relief that many of my friends on the other side would like plumbers in Ohio to pay for,” he stated. “But I think if the universities cause the problem … they ought to pay for it.”
Cotton’s bill aims to collect $15.47 billion by taxing university endowments and repurpose those funds in order to“act as a source of funding for money going to aid Israel’s war against Hamas, Ukraine’s war against Russia, and to efforts to secure the southern border,” as noted his office’s recently publisher news release.
The tax would be slapped only on private, secular institutions with endowments of at least $12.2 billion or those who have endowments of at least $9 billion that also manage a state contract college, his office declared.
“Many of America’s so-called ‘top’ universities are failing to condemn antisemitism and violence against Jewish students on their campuses. We should levy this tax on these schools’ endowments. A tax on the billions of dollars these schools have amassed would be more than enough to pay for our aid to Israel or security for the southern border,” Cotton declared.
The bill was put forward in the middle of December but still has to be debated on the Senate floor.
Universities are indeed hotbeds of wokism and must be thoroughly purged of their culturally leftist influence. Taxing endowments is a good first step. Nevertheless, the money collected from these taxes should be used to either fund trade schools or used as reparations for individuals scammed by universities.
Ultimately, the entire university accreditation system needs to be liberalized in order for more competition to be brought about on top of a thorough purging of the leftist influence in these universities.
All things considered, the current system of higher education needs to be flushed down the toilet.
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