Bill Overview
Title: Higher Education Accountability Tax Act
Description: This bill increases from 1.4% to 10% the rate of the excise tax on the net investment income of applicable educational institutions (i.e., certain private colleges and universities). It further increases to 20% the rate of such tax on net-price-increase institutions (i.e., educational institutions whose net price increased at a rate exceeding the rate of increase in the Consumer Price Index during a specified three-year period). The bill also modifies the definition of applicable educational institution to lower the per student threshold in that definition from $500,000 to $250,000 (thus making more such institutions subject to the excise tax).
Sponsors: Rep. Joyce, David P. [R-OH-14]
Target Audience
Population: Students, faculty, and staff of certain private colleges and universities
Estimated Size: 30000000
- The bill targets private colleges and universities, specifically those with large endowments and significant net investment income.
- A higher excise tax could reduce the funds available for student scholarships, financial aid, and university programs.
- Administrative staff and faculty might be affected by budget cuts or reallocation.
- Changes in tuition may impact current and prospective students, possibly deterring some from attending these institutions.
Reasoning
- The policy affects private colleges with large endowments, meaning only a subset of the US population will be directly impacted. However, students, faculty, and staff at these institutions may experience changes in tuition fees, financial aid, and job security.
- Higher excise taxes may result in decreased funding for scholarships and an increase in tuition which can deter students from enrolling, impacting their wellbeing negatively.
- Faculty and staff may face budget cuts affecting their job security or compensation, potentially decreasing their wellbeing.
- Alumni and local communities may face reduced services or partnership programs impacting their engagement with the institution.
- The simulated interviews will reflect a range of individuals impacted differently by the policy, including those who are negligibly affected as the policy targets specific institutions.
Simulated Interviews
Student (Boston, MA)
Age: 20 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 5/20
Statement of Opinion:
- I worry that tuition will increase due to this policy.
- Financial aid might become harder to receive, making it difficult for me to continue my education.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 5 | 7 |
| Year 3 | 5 | 7 |
| Year 5 | 5 | 8 |
| Year 10 | 6 | 8 |
| Year 20 | 7 | 8 |
University Professor (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- This policy might mean budget cuts which could affect my research funding and salary.
- I’m also worried about job security if enrollments drop.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 6 | 8 |
| Year 20 | 6 | 8 |
Recent Graduate (San Francisco, CA)
Age: 22 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- I’m concerned how this will impact my alumni network and the value of my degree.
- If the university reduces programs, it could affect my job prospects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
University Administrative Staff (Chicago, IL)
Age: 39 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I fear potential layoffs or reduced hours due to budget constraints.
- It's important for our school to maintain its affordability and this might challenge that.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 4 | 6 |
| Year 5 | 4 | 7 |
| Year 10 | 5 | 7 |
| Year 20 | 6 | 7 |
Prospective Student (Los Angeles, CA)
Age: 18 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 4.0 years
Commonness: 7/20
Statement of Opinion:
- I might look at other schools if tuition rises significantly.
- I’m heavily considering financial aid packages when choosing a school.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 8 |
| Year 2 | 6 | 8 |
| Year 3 | 5 | 8 |
| Year 5 | 6 | 9 |
| Year 10 | 7 | 9 |
| Year 20 | 8 | 9 |
Researcher (Houston, TX)
Age: 35 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- The policy presents a mixed bag; it could streamline funds but hurt research budgets.
- Monitoring the long-term effects on university funding will be key.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Local Business Owner (Atlanta, GA)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- Fewer students might mean less business and fewer internships.
- Collaborations on projects could decline.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 7 |
| Year 10 | 6 | 8 |
| Year 20 | 7 | 8 |
Private College Donor (Austin, TX)
Age: 50 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 7.0 years
Commonness: 6/20
Statement of Opinion:
- I worry that increased taxes will mean my donations do less to help students.
- Transparency on how the funds will replace losses is crucial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 7 | 9 |
| Year 3 | 7 | 9 |
| Year 5 | 8 | 10 |
| Year 10 | 9 | 10 |
| Year 20 | 9 | 10 |
University Board Member (Seattle, WA)
Age: 60 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- Strategically, we must adjust to maintain financial health and student support.
- This could mean difficult decisions about programs and staffing over the next decade.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 6 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 7 | 9 |
| Year 20 | 8 | 9 |
Financial Analyst (Philadelphia, PA)
Age: 32 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- The policy will force institutions to reevaluate endowment spending and operational strategies.
- Long-term implications could reshape the higher education landscape.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 9 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $7000000)
Year 2: $6000000 (Low: $4000000, High: $8000000)
Year 3: $7000000 (Low: $5000000, High: $9000000)
Year 5: $9000000 (Low: $7000000, High: $11000000)
Year 10: $12000000 (Low: $10000000, High: $14000000)
Year 100: $30000000 (Low: $25000000, High: $35000000)
Key Considerations
- Colleges may pass increased tax burdens onto students through higher tuition, affecting accessibility.
- Impacts on endowment sizes may influence donations and investment strategies.
- Consider potential risks of affecting the financial stability of smaller private institutions that fall within the expanded definition.