While initial efforts flatlined, experts believe it’s just the first volley in longterm strategy
High-profile Republicans are pushing a new strategy to tax universities’ endowments, arguing the institutions don’t deserve their tax-exempt statuses because they use their vast amounts of money to push “woke” biases.
While initial efforts in Congress appear to have stalled for now, watchdogs warn higher education leaders that this strategy has only just begun.
“With ongoing public interest and concerns about the value and cost of a college education, some lawmakers are aiming to garner voter support for their scrutiny of higher education business practices,” stated the National Association of College and University Business Officers in a recent policy memo.
The association flagged legislation proposed by U.S. Senators Tom Cotton and J.D. Vance in December, both of whom used the term “woke” in pushing the effort.
Vance’s proposal, the College Endowment Accountability Act, sought to “raise the excise tax on endowment net investment income from 1.4 percent to 35 percent for secular, private colleges and universities with at least $10 billion in assets under management,” according to his office.
Vance, in a post on X, said the universities use their vast, tax-exempt endowments “to push DEI and woke insanity.”
Cotton’s bill is called the ‘‘Woke Endowment Security Tax Act of 2023.” It sought to levy a 6 percent excise tax on the endowments of 10 American universities, a news release from his office stated.
On Dec. 14, Vance’s proposal was blocked on the Senate floor.
Prior to that action, the Republican senator had argued that university endowments “have grown incredibly large on the backs of subsidies from the taxpayers.”
He cited three universities in particular — Harvard, MIT and Penn — at which the endowments are approaching $100 billion, adding those rival some of the largest hedge funds in America.
“It must stop because it has enabled political insanity. It must stop because it has burdened an entire generation of Americans with over one trillion dollars of student debt, student debt relief that many of my friends on the other side would like plumbers in Ohio to pay for,” he said. “But I think if the universities cause the problem … they ought to pay for it.”
Vance’s office did not respond to requests from The College Fix seeking comment on whether Vance will introduce similar legislation in the next session.
Cotton’s proposal sought to raise $15.47 billion by taxing university endowments for a specific purpose, to “act as a source of funding for money going to aid Israel’s war against Hamas, Ukraine’s war against Russia, and to efforts to secure the southern border,” his office stated in a news release.
The tax would have applied to only private, secular institutions with endowments of at least $12.2 billion or those with endowments of at least $9 billion that also operate a state contract college, his office stated.
“Many of America’s so-called ‘top’ universities are failing to condemn antisemitism and violence against Jewish students on their campuses. We should levy this tax on these schools’ endowments. A tax on the billions of dollars these schools have amassed would be more than enough to pay for our aid to Israel or security for the southern border,” Cotton stated.
The bill was introduced in mid-December but has yet to be addressed on the Senate floor.
The media relations departments at Harvard, MIT and Penn — all of which would have been taxed under these proposals — did not respond to The College Fix’s request for comment.
In addition to the two senators, The College Fix previously reported that former President Donald Trump has suggested taxing the endowments of large private universities to pay for a free, online “American Academy.”
Policy experts disagree on the tactic.
But as the National Association of College and University Business Officers pointed out in its policy memo, other Republican lawmakers are talking more about the strategy.
They cite U.S. Rep. Beth Van Duyne, a Texas Republican, who raised the issue during a Dec. 13 House Ways and Means Oversight Subcommittee hearing focused on the growth of the tax-exempt sector.
She pointed out that they enjoy such benefits but the “universities have become hotbeds for left-wing indoctrination, often at the cost of student safety and well-being. The recent reports of violence against Jewish students on college campuses is just the most recent example.”
Asked about the effort to tax endowments, Gordon College political science Professor Tim Sherratt said he believes the efforts are “probably doomed to failure like Vance’s.”
However, he added via email to The College Fix, “there’s no question that this dimension of the ‘anti-woke’ movement has momentum.”
IMAGE: J.D. Vance