S. 4907: Technical Reinvestment and Apprenticeship Development through Endowment Sharing Act

This bill would raise the federal excise tax on the investment income of certain private colleges and universities. Under current law, some private colleges with large endowments pay an excise tax of 8% on their investment income; this bill would increase that rate to 15%.

What the bill would change

• It increases the tax rate on investment income for affected private colleges and universities from 8% to 15%.
• The higher tax would apply to taxable years starting 12 months after the bill becomes law.

Where the new tax revenue would go

The bill says that the extra money collected from the higher tax would be transferred each year to support career and technical education programs under the Carl D. Perkins Career and Technical Education Act of 2006. The amount transferred would be equal to the additional revenue the tax change brings in for the prior 12-month period.

Practical effect

In simple terms, the bill would take more tax revenue from certain wealthy private colleges and universities and direct that money to state-based career and technical education funding. This could affect how much money those schools have available from their endowment earnings, while increasing federal support for vocational and technical training programs.

Relevant Companies

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