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Some Md. private universities would take a hit under tax proposal

Some Maryland colleges would have to pay taxes on investment earnings under the tax legislation proposed by Republicans in the U.S. House of Representatives.

The Daily Record

November 6, 2017

 

Some Maryland colleges would have to pay taxes on investment earnings under the tax legislation proposed by Republicans in the U.S. House of Representatives.

The colleges warn that the taxes could lower the amount of money they have to spend on financial aid and student support. “Private institutions have to rely on their endowment for their viability,” said Tina Bjarekull, president of the Maryland Independent College and University Association, which represents Maryland’s nonprofit private colleges. “No one is going to hold them up if they become financially insolvent.”

Under the proposed legislation, which is subject to change as the House Ways and Means Committee marks up the bill this week, investment earnings would be taxed at a rate of 1.4 percent. The excise tax would apply to schools with more than 500 students and an endowment value of more than $100,000 per student.

Currently, that criteria would apply to Johns Hopkins University, Goucher College and Washington College. St. John’s College currently has enrollment under 500, so the law would not apply to it. But if their enrollment goes above 500, which it has in the past, they could be taxed as well.

“At this point, the information in the proposed tax reform bill is not detailed enough for us to fully assess the impact on cash flow to Washington College. We are working with our investment adviser and they are closely monitoring developments with and for us,” says Rahel Rosner, Washington College’s vice president for finance and administration. “But an excise tax is only one way in which these proposed changes would hurt Washington College, its students, and employees.”

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