WASHINGTON — President Donald Trump’s feud with America’s elite universities is lending momentum to Republicans on Capitol Hill who want to increase a tax on wealthy college endowments by tenfold or more.
House Republicans already were considering a hike in the tax on college endowments’ earnings from 1.4% to 14% as part of Trump’s tax bill. As the president raises the stakes in his fight with Harvard, Columbia and other Ivy League schools, lawmakers are floating raising the rate as high as 21% in line with the corporate tax rate. It appears no decisions have been made.
In a letter blocking Harvard from new funding on Monday, the Trump administration drew attention to the school’s “largely tax-free” $53 billion endowment, noting it’s bigger than some nations’ economies. Trump previously said he wants to see Harvard stripped of its tax-exempt status as he presses for reforms at colleges he accuses of “indoctrinating” students with “radical left” ideas.
Similar rhetoric has been echoed by Republican lawmakers who question why wealthy colleges get tax breaks that businesses don’t.
In a letter to Brown University last month, Rep. Troy Nehls of Texas, who has proposed legislation with the higher rate, said lawmakers are concerned about the priorities of universities that operate in a “largely tax-free” world. He questioned whether their endowments contribute to the public good.
Republicans appear to be chipping away at the long-held notion that colleges provide the kind of public benefit that deserves to be protected from heavy taxation. And it’s happening just as the House looks to cut or offset $1.5 trillion in spending as part of the president’s sweeping tax bill.
Colleges weren’t taxed on their investment gains until Trump’s 2017 tax package, which applied a 1.4% levy to schools that enroll at least 500 students and have $500,000 per full-time student in the bank.
A proposal floated by the House Ways and Means Committee in January called for a 14% endowment tax. Now lawmakers are looking at a 21% tax, among various options. As a senator, Vice President J.D. Vance proposed going further, to 35%.
In 2023, the current tax generated $38