Addressing Opportunities and Vulnerabilities in Tax Policy

In recent years, lawmakers in Washington have become increasingly critical of some of America’s most esteemed public and private educational institutions. Their concerns span a range of issues, including the soaring cost of college and the value proposition of a four-year degree, the perception that colleges are too "woke" and aren't adequately protecting free speech or combatting antisemitism on campus, the perceived lack of moral clarity, and allegations of harboring Chinese spies in research departments. These hot-button topics have become focal points of legislative scrutiny.?

Policymakers can use a variety of tools to influence behavior and outcomes from individuals, businesses, or organizations.? One of the most powerful of these is tax policy.? For example, lawmakers upset by any number of these topics can advocate for legislation that would increase taxes on university endowments. And several of them have already proposed these types of efforts.??

How to Prepare for 2025?

No matter the outcome of this year’s election, we expect Congress to take up a significant tax bill in 2025, as the individual tax cuts from the Trump-era Tax Cuts and Jobs Act (TCJA) will expire, along with other business provisions.? There will be bipartisan support to extend some of these. And given rising U.S. budget deficits, there will be pressure to offset the cost of such extensions with increases in taxes from other areas.???

Lawmakers could adjust the current 1.4% tax on university endowments originally enacted in the TCJA, or restructure oversight and taxation of endowments in some way.? They could also repeal or change important clean energy tax credits that were included in the Inflation Reduction Act (IRA), including the ability to receive direct payments for investing in renewable energy projects.? Currently, direct pay for most clean energy investments is only afforded to nonprofits and municipalities (meant to benefit schools, hospitals, cities, etc.).??

Given this ramp-up to some potentially monumental tax changes impacting universities and their endowments, now is the time to socialize messages and counterarguments to negative policies, develop support for your tax policy positions, build alliances with other universities and like-minded groups, and shore up relationships with key advocates in anticipation of Congress writing a significant tax bill next year.???

What Monument Advocacy Can Do to Help?

Monument Advocacy can guide and support a coalition of similarly situated universities to map out an advocacy plan that best positions the coalition to guard against increases in the excise tax on endowments and drive forward a proposal that eliminates the endowment tax for certain private universities. For instance, raising the $500,000 per student threshold so your university and other coalition members are no longer impacted.???

We have the expertise to develop and execute such a tax advocacy plan and have effectively managed numerous large coalitions.? Our senior tax policy professionals, led by Kimberly Ellis, Rich Thomas, and Brandon Audap, have deep experience working in tax policy in Washington for Republican and Democratic leaders, including on the House Ways and Means Committee, which oversees tax policy.???

We have been involved in the major tax-related fights in Washington, the fiscal cliff, and most recently, the Tax Cuts and Jobs Act, and have helped to deliver significant wins for our clients.????