GOP Proposes Taxation on US College Endowments: Who Would Be Impacted? | Updates on Donald Trump

US Congress Republicans propose a bill to raise taxes on American universities, which narrowly gained approval in the House of Representatives last Thursday. The bill’s supporters justify the measure as targeting “woke” universities. Universities have previously suffered due to US President Donald Trump’s executive orders and actions altering education, immigration policies, and his crackdown on pro-Palestine protests on college campuses. The proposed tax increases concern university endowments—the funds or assets donated to ensure an institution’s future financial sustainability. Typically composed of alumni, other donors’ charitable contributions, and corporate donations, endowments often earn investment income which could face taxation if the bill becomes law. Historically, universities have not been taxed on their endowments since the 1909 Revenue Act recognized educational institutions as nonprofit entities acting in the public interest. However, under Trump’s first presidential term, the Tax Cuts and Jobs Act of 2017 imposed a 1.4% tax on wealthier universities. The newly proposed bill aims to levy a tax ranging from 1.4% to 21% on institutions based on their per-student endowment size, with Republican lawmakers framing this as holding “woke, elite universities” accountable. Republican Chairman of the House Ways and Means Committee, Jason Smith, declare the tax aims to balance the interests of taxpayers and universities. The bill must now pass the Senate; Trump urges Republican senators to promptly approve it. An analysis suggests that many prestigious universities, such as Harvard and Yale, could face the highest tax rates, while the broader effects could also impact smaller private institutions. Other than the potential tax ramifications on universities’ ability to fund financial aid and research, there is concern that the bill might not be enforceable as originally passed by Congress due to potential amendments in the Senate, a stance also reflected in uncertainty among Republican senators. Universities oppose the bill, arguing it threatens their financial health, making college less affordable, and could erode the US’s global leadership in technology. The proposal emerges amid ongoing tensions between Trump’s administration and higher educational institutions, which have been criticized for failing to suppress anti-Semitism and supporting diversity, equality, and inclusion programs. The administration has recently taken steps to limit international student enrollments at affected universities, complicating their reliance on endowment funds for research.

Source: https://www.aljazeera.com/news/2025/5/30/republicans-plan-to-tax-us-college-endowments-who-will-that-hurt?traffic_source=rss