H.R.1006 - Higher Education Accountability Tax Act (119th Congress)
Summary
H.R.1006, the "Higher Education Accountability Tax Act," proposes amendments to the Internal Revenue Code of 1986 concerning the excise tax on investment income of private colleges and universities. The bill aims to increase the excise tax rate from 1.4% to 10%. It further introduces an additional tax of 20% for institutions that increase their net price faster than the Consumer Price Index. The bill also lowers the threshold for institutions subject to the tax by reducing the applicable endowment size from $500,000 to $250,000.
Expected Effects
The likely effect of this bill is increased tax revenue from private colleges and universities. This could potentially disincentivize tuition increases at these institutions. It may also lead to changes in how these institutions manage their endowments.
Potential Benefits
- Increased government revenue through higher excise taxes.
- Potential disincentive for private colleges to raise tuition costs excessively.
- Greater financial accountability for institutions with large endowments.
- Could encourage colleges to focus on affordability for students.
- May lead to more efficient use of endowment funds.
Most Benefited Areas:
Potential Disadvantages
- Increased tax burden on private colleges and universities, potentially impacting their financial stability.
- Possible reduction in financial aid or other student services due to increased taxes.
- Could lead to colleges seeking alternative revenue streams, potentially impacting students.
- May disproportionately affect smaller private institutions with limited resources.
- Potential for colleges to challenge the law, leading to legal battles.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's constitutional alignment primarily concerns Article I, Section 8, which grants Congress the power to lay and collect taxes. The Sixteenth Amendment further clarifies Congress's power to tax income, from whatever source derived. The bill appears to fall within these enumerated powers, as it modifies existing tax laws related to investment income. However, challenges could arise if the tax is deemed excessively punitive or discriminatory, potentially raising concerns under the Equal Protection Clause of the Fourteenth Amendment.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).