Schapiro expresses concern over implications of endowment tax


Daily file photo by Allie Goulding

University President Morton Schapiro speaks at an event. Schapiro told The Daily on Tuesday he was “worried” about the implications of the endowment tax included in the Tax Cuts and Jobs Act.

Maddie Burakoff, Campus Editor

After a provision in the Tax Cuts and Jobs Act — signed into law Dec. 22 — enacted a new endowment tax that could affect Northwestern and a handful of other private institutions, University President Morton Schapiro said he was “worried.”

The new law would enforce a 1.4 percent income tax for private universities with at least 500 students and assets valued at $500,000 or more per student. With its reported $10.5 billion endowment, NU’s assets are valued at about $510,000 per student, meaning the University could face the tax in coming years.

But the issue was not the money, Schapiro told The Daily on Tuesday. Though he does not want to potentially “throw away” millions in tax dollars, he was mainly concerned that the government had singled out a small number of private universities.

“(The provision) wasn’t about raising money,” Schapiro said. “It was about punishing the heavily endowed, highly selective (private universities).”

Schapiro said the endowment tax would only account for about $1.5 billion of the $1.5 trillion total raised through the tax bill over 10 years. And on the University’s end, the tax would likely take somewhere between $10 million and $15 million out of NU’s $2.5 billion operating budget, which wouldn’t “break us,” he said.

The real intent of the tax, Schapiro said, was to send a message to institutions like NU in opposition to their support for philosophies like “safe spaces.”

Other provisions that Schapiro said would have had significant negative impacts on the University — like repealing tax exemptions for graduate student tuition waivers — were removed before the bill was signed into law. Still, the law that was enacted was enough to worry Schapiro about the future.

“If you look at what a substantial number of Americans think about schools like Northwestern, it’s not a surprise that they went after us … in the tax bill,” Schapiro said. “And who knows what they’ll do next.”

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Twitter: @madsburk