Proposed GOP Tax Plan Would Deal Major Blow To Duke, Other Universities
Duke University's endowment could take a hit if the Republican tax plan passes. The bill includes a new excise tax on universities whose endowment fund is valued more than $100,000 per student. That could amount to a $10 or $15 million annual tax for the university, according to Duke spokesman Michael Schoenfeld.“When you tax an endowment, you're really taking money away from students and from financial aid and other important activities that are directly supported by the university endowment,” Schoenfeld said.
With a $7.9 billion endowment, Duke is among the nation's wealthiest universities. According to reporting from The Chronicle of Higher Education, Wake Forest University and Davidson College could also face the new tax. The universities' endowments help fund financial aid, as well as faculty salaries and a wide variety of research. Schoenfeld said that the tax would be a loss for Duke University and its operations, which is by far the largest employer in Durham County.
All colleges may also have a harder time raising donations as fewer individuals are expected to deduct charitable gifts under the new plan, because the standard deduction is set to raise for most income brackets. The bill also includes a ban on private universities using tax free bonds to finance construction projects.
“If it's more expensive for universities to borrow in order to finance construction and renovations, it is likely that either there will be less of it, or that additional cost will have to be passed on,” he said.
The tax plan could also affect any college student or graduate across the country regardless of their school. Any college graduate paying off student loans would no longer be able to deduct interest payments and current students would no longer be able to deduct educational costs.
Copyright 2017 North Carolina Public Radio