WEST Act of 2023 Woke Endowment Security Tax Act of 2023
Impact
The bill is designed to affect the financial frameworks of large private colleges and universities, introducing a new tax that could impact their operational budgets. If enacted, these institutions could experience significant budgetary adjustments as they allocate funds to meet this new tax obligation. Proponents argue that this measure will create more equitable opportunities for smaller educational institutions that may lack such vast financial resources. The revenue generated from the tax could potentially be redirected into educational programs or subsidies for less wealthy institutions.
Summary
SB3465, also known as the 'Woke Endowment Security Tax Act of 2023', seeks to amend the Internal Revenue Code by imposing a 6 percent excise tax on the endowments of certain private colleges and universities with substantial financial assets. The bill targets institutions with an aggregate fair market value of assets exceeding $12.2 billion. This legislation aims to generate revenue from wealthy educational entities and promote a fairer funding model within the higher education system, particularly in the context of increasing scrutiny over the financial operations of such institutions.
Contention
However, the bill has encountered criticism and pushback from various stakeholders in the education sector. Opponents argue that imposing an excise tax on academic institutions could hinder their financial stability and reduce their capacity to support educational endeavors. There are concerns that the tax could impact scholarships and funding for research, ultimately affecting students' educational experiences. Additionally, the bill's opponents highlight issues of fairness—for example, taxing educational institutions may be seen as penalizing them for their successful fundraising and investment strategies.
Endowment Tax Fairness ActThis bill increases the excise tax on the net investment income of certain private university and college endowments. Under current law, certain private universities and colleges with 500 or more tuition-paying students (of which more than 50% are located in the United States) and endowments that are at least $500,000 per student pay an excise tax in the amount of 1.4% on the net investment income from such endowments.The bill increases the amount of the excise tax to 21% of the net investment income from such university and college endowments. Further, the bill provides that amounts collected from the increase to the excise tax on the net investment income from such university and college endowments are (1) to be deposited into the general fund of the Treasury; and (2) used to reduce the national deficit and, subsequently, the national debt.