At nearly 500 pages, the emerging Senate tax bill provides breaks for industries small and large, but one particular provision sparked a heated exchange Friday night, something Democrats calling it the “Hillsdale carveout.”
That’s for Hillsdale College, the small school in Michigan that has a large endowment funded by the DeVos family and other wealthy conservatives.
A last-minute inclusion in the legislation, authored by Sen. Patrick Toomey, R-Pa., would exempt any college that does not accept federal funding from a 1.4 percent tax on investment income from university endowments.
There are a dozen or so colleges that do not accept federal funding, but Democrats believe that Hillsdale might be the only one that actually qualifies for this new tax benefit under the language proposed.
“Would the senator answer a question about the provision” Sen. Clair McCaskill, D-Mo., asked Toomey during debate on the legislation, highlight the college’s connection to Education Secretary Betsy DeVos. “Do you know who the biggest donor was to the Hillsdale College endowment? Would that be the DeVos family?”
“It would be available to any college that made that choice,” Toomey responded, defending Hillsdale for saving taxpayers ” many millions altogether” for choosing not to accept federal funds. He said such colleges should not pay higher federal taxes on capital gains from their endowments, putting that onus on massive private university endowments such as Harvard and Yale.
“Any others that chose to [reject federal funding] would be able to participate,” Toomey said.
However, based on private estimates, it appears that Hillsdale might be the only college benefiting from the Toomey provision, and late Friday staff were working on different wording that would exempt other colleges from paying the new tax.
Democrats said Hillsdale is the only college they can find that would actually benefit from the exemption as currently written, as it’s the only one with an endowment large enough to meet the tax threshold. The new endowment levy covers private colleges whose endowments are worth more than $250,000 per full-time student, according to a Bloomberg analysis.
“Our understanding is this is written for one to qualify,” Sen. Jeff Merkley, D-Ore., said. “That’s why it shouldn’t be done at the last minute.”
Democrats are suggesting Hillsdale, a conservative college whose alumni…