Syracuse University’s endowment would have to increase by more than $4.3 billion before an excise tax proposed by Republican congressional leaders could hit the university as part of a contentious tax reform plan.
The GOP’s Tax Cuts and Jobs Act, criticized by Democrats and liberal groups for disproportionately benefiting wealthy Americans, would include a possible 1.4 percent excise tax on major private university endowments.
Passed by the House of Representatives earlier this month, the plan would impose the new tax on universities with an endowment of $250,000 or more per full-time student, a figure calculated by dividing a university’s total endowment by its full-time student population.
As of Oct. 31, SU’s endowment was $1.3 billion, a university spokeswoman said in an email. The endowment is a pool of money collected from donors that’s invested in the stock market. Endowments can help colleges fund scholarships, faculty salaries and academic programs, among other things.
Currently, full-time students at SU are worth about $57,817 each, in terms of endowment money. In turn, the university would need an endowment of just over $5.6 billion for the proposed excise tax to theoretically take effect.
Four SU peer institutions would be hit with the tax, though, if the Senate passes a bill identical to the House’s legislation: Cornell University, Northwestern University, the University of Notre Dame and Vanderbilt University.
Cornell’s endowment is about $6.8 billion and, under the House tax plan, would lose roughly $10.5 million annually, the university’s president said in a recent interview with The New York Times. Out of $3.8 billion in endowed funds, Vanderbilt would lose about $7 million per year, the university’s chancellor said in a statement.
Northwestern and Notre Dame would also be affected by the tax. Northwestern had an endowment of about $9.8 billion at the end of fiscal year 2016. Notre Dame had an endowment of $11.8 billion, the university announced earlier this year.
A Northwestern spokesperson did not immediately respond to a request for comment on how much the university stands to lose if the proposed excise tax ever takes effect. A Notre Dame spokesperson declined to comment.
“Universities are clearly targeted here,” said David Plank, a faculty member in Stanford University’s Center for Education Policy Analysis, of the GOP’s tax plan.
Originally, legislators proposed an excise tax on universities with an endowment of $100,000 or more per full-time student. The language of the House bill was amended on Nov. 7, though, to $250,000 per full-time student.
Without this amendment, other SU peers would have been hit with the excise tax: Boston College, Georgetown University, Lehigh University, Southern Methodist University, Tulane University and the University of Rochester.
None of those schools now meet the threshold of $250,000 per full-time student.
“Most of the money in this comes from the extreme concentration of wealth in a small number of schools,” said Mark Schneider, vice president and institute fellow at the American Institutes for Research. “You know? Harvard, Princeton, Yale, Stanford.”
Only about 60 to 70 private colleges and universities across the United States would be affected by the proposed tax, The Washington Post reported near the beginning of November. All Ivy League colleges were included in that estimate. Harvard University, for example, has a massive endowment totaling roughly $37 billion. Yale University has an endowment of $27.2 billion.
The excise tax could increase federal revenue by $2.5 billion between 2018 and 2027, according to a report by the Joint Committee on Taxation.
