Republicans Want Universities to Pay Their Fair Share

Won’t somebody please think of the lavishly endowed schools?

The clarion call from the left has been for the affluent to pay their fair share of taxes. While US government data indicate that prosperous Americans already pay a lion’s share of the nation’s taxes, some politicians possess an insatiable appetite. But what about elite universities? House Republicans think these post-secondary institutions should begin paying their fair share.

Endowment Taxes for Universities

GOP lawmakers in the lower chamber recently released the 389-page text of the “one big beautiful bill.” Critics called it a handout to the rich, though proponents portrayed it as legislation to help all Americans. Perhaps there is something in the middle? In any case, the bill ultimately failed in the House, but it still shows Republicans have their sights set on one group for certain.

According to the drafted text, the tax-writing Ways and Means Committee wants to increase university endowment taxes, ranging from a hike of 1.45% to 21%. The levy would depend on the size of universities’ endowments, essentially pots of gold for places of higher education. Here is a breakdown of the tax rates:

• Endowments valued at $750,000 or less per student: 1.4%
• Endowments valued between $750,000 and $1 million: 10%
• Endowments valued above $1 million per student: 21%

For example, Harvard University maintains a student-adjusted endowment of $2 million, which means Uncle Sam would hit it hard.

Educational organizations have already slammed the proposal, with some industry experts likening it to a scholarship tax. “[The National Association of College and University Business Officers (NACUBO)] remains staunchly opposed to any tax targeting endowments, including these proposed changes that will make bad policy even worse, adding to college costs and making higher education less affordable,” said NACUBO in a statement.

The Council for Advancement and Support of Education (CASE) says the tax threatens Americans’ generosity and describes the proposal as “draconian”:

“Rather than cutting taxes, House Republicans are proposing substantial tax increases on funds that overwhelmingly support students and life-changing and saving research, redirecting charitable dollars away from the original intent of donors, who wish to support higher education and foster opportunities for students. The proposed tax rates are nothing short of draconian and they will undoubtedly have a chilling effect on the invaluable philanthropic investment that has been vital in supporting American educational institutions, their students, and their contributions to society.”

Washington Looking for a Fair Share

The Trump administration has not been coy in its complaints about these facilities.

Education Secretary Linda McMahon penned a scathing letter to Harvard. “Despite amassing a largely tax-free $53.2 billion endowment (larger than the GDP of 100 countries), [Harvard] receives billions of dollars of taxpayer largess each year,” McMahon wrote. “If Harvard prefers not to change, then Harvard should have no problem using its overflowing endowment to fund its bloated bureaucracy.”

For years, many experts have purported that governments should diminish taxpayer funding for private universities and colleges, particularly elitist schools. One tenet behind this argument is that Ivy League institutions like Harvard and Yale could depend on their endowments to keep campuses afloat. Does Harvard need the $550 million it received last year? What about Yale’s $899 million?

“It’s high time that bloated and entitled universities pay their fair share for the government services they use,” economist Stephen Moore wrote in RealClear Politics in March. “Why not? Their professors forever lecture us about tax ‘fairness,’ but the schools where they teach a few hours a week for their munificent salaries are the very embodiment of mostly white ‘privilege.’ They are the richest institutions in the world that go untaxed.”

What’s worse, taxpayers are sending their hard-earned dollars and cents to these entities that profess progressive causes, effectively subsidizing antisemitic actions, DEI rules, and Marxist classroom programming.

No Complaints

Ultimately, advocates of taxing high-income households and corporations should probably be unopposed to raising tax rates for prestigious organizations like Stanford, Yale, and Harvard. If being progressive and not regressive is the objective in public policymaking, then this provision would unlikely garner much pushback in the nation’s capital. Then again, if universities are espousing leftist dogma, the opposition makes sense.