From the San Francisco Chronicle: New federal rules single out just one California university — Stanford — for a massive tax bill that will grow to more than $1 billion over the rest of the decade, rather than the $175 million the school would have otherwise paid. The higher tax rates are part of the national spending bill President Donald Trump signed into law in July and target private university endowments — the cushions of cash that colleges rely on to spin off funding for everything from student scholarships to infrastructure projects. Stanford, it turns out, is one of just 19 private universities and the only one in California with a large enough endowment relative to its enrollment to trigger the higher tax hit next year, according to an analysis by the conservative American Enterprise Institute. By 2030, the number could rise to 25.
College endowments were exempt from federal tax before 2017. But during the first Trump administration, private colleges with 500 or more students began paying a 1.4% endowment tax. The new tax structure that kicks in next year not only includes higher rates, but also taxes more things, such as royalty income from research that ever benefited from a federal grant. Under the new law, colleges enrolling fewer than 3,000 tuition-paying students are exempt. That means 26 private universities nationwide will no longer pay any federal tax on their endowment, including CalTech, Pomona and Claremont-McKenna in California...
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