Connecticut Senate Bill SB00385

Connecticut 2025 Regular Session

• Introduced: 1/9/25
• Refer: 1/9/25

Caption

An Act Establishing A Capital Gains Tax On Certain Endowment Funds Of Institutions Of Higher Education And Concerning The Use Of The Revenue Generated.

Impact

The implementation of SB00385 would contribute to a significant alteration in state tax policies concerning the financial frameworks of higher education endowments. By introducing a capital gains tax for endowment funds surpassing the set valuation threshold, the bill could potentially encourage more equitable financial practices within educational institutions. The additional funds accumulated from this tax are intended to alleviate the burden on individuals participating in the Paid Family and Medical Leave Insurance Program, ultimately aiming to create a more sustainable and supportive financial model for families relying on this program.

Summary

SB00385 proposes the establishment of a capital gains tax specifically targeting certain endowment funds of institutions of higher education. The bill stipulates that any endowment fund valued at more than $500,000 per student for a taxable year would be subject to this tax. The main objective is to channel the revenue generated from this tax into reducing the financial contributions required from participants in the Paid Family and Medical Leave Insurance Program. This approach aims to provide financial relief to those contributing to the program while also addressing the wealth accumulated in endowment funds at higher education institutions.

Contention

While proponents advocate for the redistribution of funds to aid families and lower the required contributions for the Paid Family and Medical Leave Insurance Program, there are notable points of contention surrounding the bill. Critics may argue that the introduction of a capital gains tax on endowment funds could disincentivize charitable donations to these institutions or reduce the financial robustness of higher education entities. The debate will likely involve discussions around the balance between taxation and the financial independence of educational institutions, along with the potential long-term implications for state funding and social programs.