New GOP Bill Aims to Hold Private Universities to Same Tax Standard as Corporations: ‘On Notice’

EXCLUSIVE: A GOP lawmaker is looking to significantly raise taxes on endowment profits that accumulate private universities to align your tax with the current corporate tax rate.

Many private universities have invested funds for operational use that earn interest each year, known as an endowment. In 2017, the Trump-era Tax Cuts and Jobs Act enacted a 1.4 percent tax on the interest private universities received from these endowments.

However, a new Republican bill would increase that tax to hold elite educational institutions to the same tax standard as corporations, which currently see a 21% corporate tax rate.

Rep. Troy Nehls, R-Texas, is expected to introduce legislation on Wednesday, the Endowment Tax Fairness Act, to increase the excise tax on annual returns on endowment investment for private universities by nearly 20 percentage points, from 1.4% to 21%.

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Rep. Troy Nehls, R-Texas (Nathan Posner/File)

The A GOP-backed bill then it would require the revenues to be deposited in the General Treasury Fund, a fund that manages the government’s budget, to reduce the national deficit.

Nehls tells Fox News Digital that he introduced the bill because elite colleges shouldn’t have “much lower” taxes than working Americans.

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“Elite private universities have amassed and sit on massive university endowments and pay less than 2% tax on the investment gains of their endowments, which is far less than what most North- hardworking Americans in taxes. Meanwhile, these universities have significantly increased enrollment for America’s youth, which has overwhelmingly exceeded the average annual inflation rate,” he said.

the tax it would apply to private colleges and universities that meet certain requirements, such as institutions that have 500 or more students.

Harvard University (Maddie Meyer/File)

Additionally, universities that would be taxed are those that have total fair market value of assets of at least $500,000 per student and that have more than 50 percent of their student body located in the United States, according to the bill.

Endowments subject to the tax, including Harvard, Yale, Princeton and Columbia, reportedly have a pool of $270 billion in assets under management.

“This is unacceptable,” Nehls told Fox. “My bill would put elite universities with massive endowments on notice by holding them to the same tax standard as corporations.”

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If passed, the tax would go into effect immediately after the bill’s enactment date.