A provision in the Republican’s new tax plan could threaten the financial stability of some private universities, including DePauw.
The tax reform plan the GOP laid out includes taxing college endowments; however, only some institutions would be impacted by this plan.
“I’m disappointed by this idea and it is my hope that wiser heads will prevail as this is debated and discussed,” said DePauw University President Mark McCoy. “People will see this is not a good idea for America.”
According to an article in The Chronicle of Higher Education, endowments would only be taxed if the endowment assets total more than $100,000 per full time student. DePauw’s endowment value per student is $281,627. The net investment income is what is being taxed and it would be taxed at a rate of 1.4 percent.
The University is currently unaware of how this proposed plan would affect students, faculty and staff, both currently and in the future, but it would have an effect.
Only private colleges and universities with at least 500 students and assets will be subjected to the excise tax. DePauw would be impacted by this tax if the bill passes and goes into law. The proposed plan does not specify if only undergraduates will be counted in this program as opposed to all full-credit students, including graduate programs.
Under the current plan, certain private institutions and charitable trusts are taxed at 2 percent, and public charities and foundations are exempt from the excise tax.
Other universities in the Great Lakes College Association that would be affected are Albion College, Denison University, Earlham College, Kalamazoo College, Kenyon College, Oberlin College, Ohio Wesleyan College, Wabash College, and the College of Wooster.
President McCoy said he is not currently worried about the tax plan, but if it is passed there is a real cause for concern. President McCoy is confident the tax plan will not continue as it is currently written and changes will be made.
He added that the University will act when it needs to. “(DePauw will) prepare once we know exactly what we need to be prepared for,” President McCoy said.