Sponsors (4)
The bill raises federal revenue by taxing very large private-college endowments to reduce the deficit, but that revenue comes at the risk of reduced scholarship and program support, higher costs for students, and weaker future philanthropic support for institutions.
Taxpayers and the general public: The bill imposes a new tax on large private college endowments, increasing federal receipts that can be used to lower the federal deficit and national debt.
Students and public finances: Redirecting investment income from very large endowments into federal revenue may reduce pressure on raising public funds for other priorities by increasing federal receipts.
Students from low- and middle-income families: Reduced endowment support is likely to lead to fewer financial aid awards or higher tuition at affected institutions, worsening affordability for the students who rely on endowment-funded aid.
Private colleges and universities: A steep increase in taxation on endowment investment income will substantially reduce funds available for scholarships, research, and basic operations, potentially forcing program cuts or drawdowns of principal.
Donors and alumni: Heavier taxation on endowments may discourage donations or change giving patterns, reducing future philanthropic support for institutions.
Based on analysis of 2 sections of legislative text.
Raises the excise tax on net investment income of certain private colleges and universities from 1.4% to 21%, with revenues used to reduce the deficit and then the debt.
Introduced January 15, 2025 by Troy E. Nehls · Last progress January 15, 2025
Raises the excise tax on net investment income of certain private colleges and universities from 1.4% to 21% and directs the revenue to the Treasury general fund to first reduce the federal deficit and then the national debt. The higher tax rate applies to taxable years beginning after the date of enactment and represents a large, immediate increase in tax burden on affected institutions’ investment returns.