Natural State News

A newly-introduced bill, the Ivory Tower Tax Act, seeks to support vocational education with a 1% tax on the endowments of the nation’s wealthiest private colleges, and require them to draw down 5% of their endowment value annually.

Sen. Tom Cotton (R-Arkansas), who introduced the legislation in the U.S. Senate, took to social media to explain his reasons for why the bill is important.

“Our wealthiest universities have amassed billions of dollars, virtually tax-free, all while indoctrinating our youth with un-American ideas,” Cotton said in the post to his official Facebook page. “My bill will tax mega-endowments to support training programs to create high paying, working-class jobs.”

The cut-off that separates the wealthiest private universities from the rest is possessing an endowment in excess of $2.5 billion, according to a press release Cotton shared. To be affected by the tax, colleges would also have to have more than 500 full-time students and an endowment with more than $500,000 per full-time enrolled student.

Cotton’s bill would also exempt institutions with a religious mission, the release states.

The affected colleges would be required to use 5% of their endowments each year in order to support their educational mission, which is similar to requirements placed on private foundations, according to the release. Those who did not meet that 5% would face an unspecified penalty.

The resulting tax revenue is expected to be approximately $2 billion annually, according to the release. All funds would be required to be spent on vocational and apprenticeship programs.