House Bill Is Said to Tax University Endowment Income at 1.4%

(Bloomberg) -- The House tax bill would tax university endowment income at 1.4 percent, according to a Republican aide.

The tax would apply to schools with assets of more than $100,000 per student and exempts small schools, said the aide who asked not to be named because the bill isn’t yet public.

The bill will also end deductibility for donations attached to seat licenses at sporting events.

The cost of college has been rising faster than inflation for decades, and the richest schools keep getting richer through donations and returns. College endowments have gained almost 13 percent on average for their investments for the year ended in June. About 800 colleges had $515 billion in assets as of June 2016.

Colleges have argued that their endowments can’t be spent like savings accounts, and they must legally honor donor agreements binding the way money is distributed. Colleges don’t pay taxes on their investment income and donors receive tax deductions for their gifts to colleges.

To contact the reporters on this story: Colleen Murphy in Washington at cmurphy194@bloomberg.net, Janet Lorin in New York at jlorin@bloomberg.net.

To contact the editor responsible for this story: Alexis Leondis at aleondis@bloomberg.net.

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