Taxing University Endowments: The Proposed Woke Endowment Security Tax Act of 2023

I would vote against this bill just because of its suggested title if I were in Congress.  Its another daily micro-aggression layered on what is an otherwise arguable position.  The bill would impose a 6% tax on endowments of very well endowed universities.  People use “woke” as a dog whistle to scare other people into believing that an angry black man like me is out to get them.  I am not in a particularly good mood after reading Section 1 of this bill and some stuff the spineless folks at Tax Notes are doing, but I am not out to get anybody.  And whatever else “woke” means, it has nothing to do with taxing endowments at wealthy universities. Here is the Senate sponsor’s press release.  And here is part of the bill introduced in the Senate a few days ago.    

SECTION 1. SHORT TITLE.  This Act may be cited as the ‘‘Woke Endowment Security Tax Act of 2023’’ or the ‘‘WEST Act of 2023

SEC. 2. EXCISE TAX ON CERTAIN LARGE PRIVATE COLLEGE 2 AND UNIVERSITY ENDOWMENTS.

(a) IN GENERAL.—Subchapter H of chapter 42 of the Internal Revenue Code of 1986 is amended by adding  at the end the following new section:

‘‘SEC. 4969. EXCISE TAX ON CERTAIN LARGE PRIVATE COLLEGE AND UNIVERSITY ENDOWMENTS.

‘‘(a) TAX IMPOSED.—There is hereby imposed on each specified applicable educational institution for the institution’s first taxable year beginning in 2023 a tax equal to 6 percent of the aggregate fair market value of the assets of the institution at the end of the preceding taxable year.  

‘‘(b) SPECIFIED APPLICABLE EDUCATIONAL INSTITUTION.—For purposes of this subchapter, with respect  to a taxable year, the term ‘specified applicable educational institution’ means—

‘‘(1) any applicable educational institution, other than an institution which is religious in nature, the aggregate fair market value of the assets  of which at the end of the preceding taxable year (other than those assets which are used directly in  carrying out the institution’s exempt purpose) is at  least $12,200,000,000, and

 ‘‘(2) any applicable educational institution—  

‘‘(A) which operates a college on behalf of a State pursuant to State statute or contractual agreements, and

‘‘(B) the aggregate fair market value of the assets of which at the end of the preceding 6 taxable year (other than those assets which are used directly in carrying out the institution’s exempt purpose) is at least $9,000,000,000.

darryll k. jones