A new Republican-backed bill in Congress seeks to pressure elite private colleges to pull their endowment dollars from hostile Chinese entities by taxing those investments at a 100 percent rate.
If passed, the bill would institute a 50 percent excise tax on the principal investment for all entities added to the U.S. government’s sanction list, such as the Commerce Department’s Entity List, and a 100 percent tax on gains realized from such investments.
It would apply to any private college or university with an endowment valued at over $1 billion, of which there are approximately 80 in the United States, including Harvard ($53 billion), Yale ($42 billion), and Princeton ($37 billion) Universities and the Massachusetts Institute of Technology ($27 billion).
“These billion-dollar, tax-advantaged university endowments have a moral obligation to divest from companies that are detrimental to the safety and security of the United States,” said Murphy in a statement announcing the bill.
However, when it comes to financial exposure to China, those institutions are less willing to do the same to their problematic Chinese investments, according to Murphy.
“Unfortunately, it is clear that we must force their hand to take the same approach for compromising Chinese entities that are a known risk to U.S. national security,” the congressman said.
In June, Murphy sent a letter to 15 private colleges and universities with the largest endowments, asking them to clarify whether their endowments were invested in any entity on U.S. government sanction lists. He also asked them what polices they have in place to divest from any entity added to those lists.
“At least 75 percent of the schools who responded to my letter have exposure to entities that have been deemed a risk to our nation’s security,” Murphy said. “That is completely unacceptable.”
Reps. Brad Wenstrup (R-Ohio), Adrian Smith (R-Neb.), Lloyd Smucker (R-Penn.), Darin LaHood (R-Ill.), and Neal Dunn (R-Fla.) joined Murphy as co-sponsors of the bill.
