Endowment Tax Fairness Act
Endowment Tax Fairness Act
Plain Language Summary
# Endowment Tax Fairness Act Summary **What the Bill Does:** This bill would significantly increase the federal excise tax on investment earnings from university and college endowments. Currently, wealthy private colleges and universities with at least $500,000 in endowment per student pay a 1.4% tax on their investment income. The bill would raise this tax to 21%—a substantial increase. Revenue collected from this higher tax would go to the U.S. Treasury to help reduce the national deficit. **Who It Affects:** The bill targets a specific group: larger private colleges and universities (those with 500+ tuition-paying students, mostly located in the U.S.) that have significant endowments.
This primarily affects prestigious, well-funded institutions. The tax increase could affect these schools' finances, potentially impacting tuition, financial aid, research funding, or other campus operations, depending on how institutions respond. **Current Status:** The bill is currently in committee, meaning it has been introduced but has not yet been debated or voted on by the full House of Representatives. It was sponsored by Rep. Troy Nehls (R-TX).
CRS Official Summary
Endowment Tax Fairness ActThis bill increases the excise tax on the net investment income of certain private university and college endowments. Under current law, certain private universities and colleges with 500 or more tuition-paying students (of which more than 50% are located in the United States) and endowments that are at least $500,000 per student pay an excise tax in the amount of 1.4% on the net investment income from such endowments.The bill increases the amount of the excise tax to 21% of the net investment income from such university and college endowments. Further, the bill provides that amounts collected from the increase to the excise tax on the net investment income from such university and college endowments are (1) to be deposited into the general fund of the Treasury; and (2) used to reduce the national deficit and, subsequently, the national debt.
Latest Action
Referred to the House Committee on Ways and Means.