Toomey helps small college
WASHINGTON — Republicans want to tax college and university endowments, but U.S. Sen. Pat Toomey, R-Pa., carved out a narrow exemption that appears to be tailored to a single school in Michigan with ties to conservatives including U.S. Education Secretary Betsy DeVos, former Club for Growth president Chris Chocola and GOP campaign financier Charles Koch.
Hillsdale College, a non-denominational Christian institution, has a $482 million endowment and would have to pay $6.7 million in new taxes without the Toomey exemption.
Other colleges and universities have to pay a 1.4 percent excise tax on their endowments under the GOP tax plan if they have more than 500 students and assets worth at least $500,000 per student.
Mr. Toomey’s amendment did not mention Hillsdale by name, but the senator on Friday could not name any other institutions that would be affected by his exemption. It applies to schools that do not accept federal Title IV money, which includes funding for student aid.
A handful of schools around the country, including Grove City College, decline federal funding and, as a result, are not subject to federal prohibitions on discrimination at educational institutions.
Most or all of those schools have endowments that fall below the $500,000per-student threshold.
Senate Democrats accused Mr. Toomey of singling out Hillsdale College for special treatment because it is supported by the DeVos family and the Koch brothers.
“I can’t find anybody else in America who benefits from this particular provision,” said U.S. Sen. Ron Wyden, D-Ore.
Mr. Toomey said any school that forgoes federal money can claim the exemption, but during testy debate on the Senate floor he could name only one: Hillsdale.
“If a college chooses to forgo federal money and the students that attend have to find their own way to get there, it is diminishing the burden that the college would otherwise impose on taxpayers. And so it’s perfectly reasonable in my view to exempt such a college from the tax on endowments,” said Mr. Toomey, who called Hillsdale “a wonderful institution.”
A spokeswoman for Hillsdale College could not be reached Friday evening.
The National Association of Independent Colleges and Universities opposes the excise tax.
“It’s an unfair intrusion into charitable giving, and a punitive and mean-spirited attack on one sector of higher education,” said Karin Johns, the association’s director of tax policy.
“It’s curious that Sen. Toomey offered this assistance to Hillsdale while other Pennsylvania private colleges remain on the list,” including Bryn Mawr and Swarthmore.
“It doesn’t feel that way to us,” Sen. Claire McCaskill, D-Mo., said of Mr. Toomey’s contention that the exemption is available to any college that declines Title IV funding.
“It feels like this is a very limited provision written for a very special person.”