Endowments subject to the tax hold over a quarter trillion dollars of assets under management.
WASHINGTON, D.C. – This morning, Senate Democrats blocked legislation from Senator JD Vance (R-OH) to tax the endowments of our nation’s most elite institutions. Senator Vance’s College Endowment Accountability Act would 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.
As of FY2022, endowments subject to the tax hold a combined $270 billion of assets under management and include: Harvard, Yale, Stanford, Princeton, MIT, Penn, Northwestern, Columbia, Washington University in St. Louis, Duke, and Vanderbilt.
Senator Vance delivered the following remarks on the Senate floor:
“How is it that universities, that should be responsive to the public will, responsive to their donors and alumni, responsive to their students, how is it that they can go so far so fast without any pushback? And the answer, my fellow Americans, Mr. President, is university endowments, which have grown incredibly large on the backs of subsidies from the taxpayers, and they have made these universities completely independent of any political, financial or other pressure, and that is why the university system in this country has gone so insane. At just three universities, Mr. President, Harvard, MIT and Penn, the endowments are approaching $100 billion: that is as large as some of the largest hedge funds in America. In fact, Harvard, Penn, Yale, many of our Ivy League institutions and others beyond that are little more than hedge funds with universities attached to them as pretend.
“This must stop. 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, but I think if the universities cause the problem, Mr. President, they ought to pay for it …
“Right now they pay a tax that is less than 2 percent on their net income… far lower than any of the working class members of my own family, far lower than most Americans pay in taxes. Why is it that we allow these massive hedge funds pretending to be universities to enjoy lower tax rates than most of our citizens, people who are struggling to put food on the table and buy Christmas presents this season? And yet they ‘enjoy’ a far, far higher tax rate than these university endowments. It’s insane. It’s unfair. And I think we ought to fix it in this chamber now.”
Read the legislation here. Watch Senator Vance’s remarks on the Senate floor below: