Private universities with large endowments are fretting over a provision in the House-passed “big, beautiful” bill that would significantly raise the tax rate on their annual investment income.
House Republicans’ proposal would raise the tax rate on certain universities’ endowment profits from 1.4% to 21%, a move that could add hundreds of millions of dollars to their annual tax liability. Universities whose massive endowments provide billions of dollars of wealth at their disposal are warning that failure to strike the proposal from President Donald Trump’s sweeping tax and spending package would deal a “devastating” blow to their operating budgets. (RELATED: House Republicans Put Ivy League’s Massive Endowments On Chopping Block)
“This is a devastating piece of legislation for us,” Swarthmore College vice president for finance and administration Robert Goldberg told the Wall Street Journal. “It takes something that’s fairly manageable to something that’s not tenable.”
GOP lawmakers have defended placing colleges’ endowments in their crosshairs, arguing that universities are no longer fulfilling their core mission and instead operate more like hedge funds rather than prioritizing the education of students. Additionally, congressional Republicans allege that many of the universities that would be subject to a higher tax on their endowment earnings allowed antisemitism to fester on their campuses during the Biden administration.