Endowment Accountability Act

Key Points

• This bill would significantly increase the tax that wealthy private colleges pay on their investment earnings. Currently, these schools pay a 1.4 percent tax on the money they make from their endowments, but this plan would raise that rate to 10 percent.
• The plan also changes which schools have to pay the tax. Right now, only schools with at least 500,000 dollars in assets per student are taxed. This bill would lower that limit to 200,000 dollars per student, which means many more private colleges would be affected.
• The goal of the policy is to collect more tax revenue from elite institutions with large savings accounts. Supporters believe these schools should contribute more to the public or use their wealth to lower the cost of tuition for their students.
• If this becomes law, it would take away a larger portion of the money elite universities use for research, financial aid, and campus buildings. The new rules would apply to the first tax year after the bill is signed into law.

Impact Analysis

Govbase has not yet run an impact analysis on this legislation.