Top Republicans were unmoved. “In the end, they wanted this endowment tax badly enough that it didn’t really matter who it affected,’’ said Karin Johns, director of tax policy for National Association of Independent Colleges and Universities.Lauren Aronson, a House Ways and Means Committee spokeswoman, said the tax’s structure protects smaller endowments and exempts public universities—merely subjecting the wealthiest schools to the same tax private foundations face.
That’s little solace for the six colleges in red-state districts that are likely to pay the levy. (Bloomberg came up with its list using the latest available endowment values and federal enrollment data. The government hasn't yet specified how it will calculate the tax, so the precise number of schools subject to it will depend on its method.) These unlucky few include Indiana’s Notre Dame, where U.S. Vice President Mike Pence gave a commencement address in May, and Grinnell, whose state has long been represented by powerful Republican Senator Chuck Grassley.
Officials at Grinnell, which has a $1.87 billion endowment, petitioned Iowa’s Congressional delegation. President Raynard Kington also reached out to Tom Cole, a Republican U.S. Representative from Oklahoma—and, more to the point, a Grinnell graduate who received an honorary degree from the college in 2016.
A health-care economist and physician, Kington said colleges, which often fail to promote accomplishments in science and medicine, are paying the price for the scarcity of conservative voices on campus and concerns with political correctness drowning out free speech.
“This was an easy way to demonstrate a lack of love for a certain group of institutions within the political arena,” Kington said.
Republicans did try to exempt Berea College, a private school in Kentucky with a $1 billion endowment, whose state is represented by Senate Majority Leader Mitch McConnell. Berea, which charges no tuition, enrolls 1,600 low-income students, mostly from Appalachia. Berea says the tax could cost the school $1 million a year and lead it to enroll 30 fewer students. Democrats refused to carve out a single college in a Republican district. Berea President Lyle Roelofs said McConnell told him he was still looking for a way to spare the college.
At Virginia’s Washington and Lee University, which said the tax would have cost $825,000 last year, officials pressed their U.S. Representative, Republican Bob Goodlatte. They also reached out to Republicans in Texas, Georgia, Kentucky and North Carolina, according to Steve McAllister, vice president of finance.
In a statement, Goodlatte said a tax could encourage spending more capital on lowering tuition, but he still had concerns about it and was looking for an “equitable solution.’’
In perhaps the unkindest cut of all, William Dudley, Washington and Lee’s president, didn’t even get to speak with Goodlatte until after the Senate vote. By then, of course, it was too late. The school might have expected more deference considering where the congressman earned his law degree: Washington and Lee.
This article was provided by Bloomberg News.