Republicans eyeing vast billions in university endowments for new taxes

Colleges and universities across America have an estimated $837 billion stashed away for a rainy day if they want, in their endowments.

And Republicans in Congress are eyeing that trove as a possible source for tax revenue for the nation.

Reports say that Harvard alone has about $49 billion stashed away, and the University of Texas some $45 billion.

But members of the GOP have talked about raising the tax on those assets significantly, to help bring in revenue to balance the tax cuts they intend to create in a “sweeping fiscal overhaul,” according to a report in the Washington Examiner.

“I love it. We should do it,” U.S. Rep. Troy Nehls, R-Texas, said in an interview with the publication about taxing endowments.

The report explained the 2017 Tax Cuts and Jobs Act, during President Donald Trump’s first term, set an excise tax of 1.4% on the investment income of universities if their endowments exceed $500,000 per student.

That has raised, over the years, not even a billion dollars.

But Nehls is proposing a plan that would make that rate 21%, “which would bring it in line with the rate paid by for-profit corporations,” the report said.

That is estimated to be able to raise $70 billion over a decade, the report said the Tax Foundation suggested.

The GOP could adopt that through reconciliation, a process in Congress that allow proposals to bypass the Senate filibuster, where Democrats could halt such an idea, and be adopted with a simple majority vote.

Universities already had been facing significant financial turmoil because of the cuts they have faced under the Department of Government Efficiency’s efforts to reduce fraud, waste and corruption in government spending.

Multiple grant programs have been affected.

The report explained the GOP generally likes the idea, because universities are viewed “as overrun by left-wing radicalism.”

Another possible change facing universities is a plan to end the tax exemption from municipal bonds, where the interest, under current law, is excluded from taxable income.

A spokeswoman for the National Association of College and University Business Officers said the options are part of the “tools that colleges and universities use to keep costs low.”

But actually, Scott Hodge, of Arnold Ventures, explained the average university paid some $1,000 in interest expenses per student as recently as 2020, “raising costs without improving education.”

Other actions under the Trump administration also have hit the education industry.

The White House already said it would withhold $400 million from Columbia University because of allegations of anti-Semitism.

And it has paused $175 million in grants to the University of Pennsylvania because of that school’s beliefs in transgender ideologies.

And 2,000 layoffs were announced by Johns Hopkins University when the government halted $800 million in U.S. Agency for International Development grants there.