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Colleges and higher ed lobbyists are refining their attacks against House Republicans’ proposed tax overhaul, taking aim at provisions that would significantly affect institutional operations as the tax plan goes under the microscope.

Several proposals to raise taxes on wealthy colleges and universities came under fire, including a 1.4 percent excise tax on private university endowments valued at $100,000 or more per full-time student and a 20 percent excise tax on employee compensation above $1 million at all nonprofit entities. So did another proposal that would raise the cost of construction for private colleges, rich and poor, by eliminating tax-exempt private-activity bonds.

The changes would harm colleges’ financial health, drive increased costs for students and harm colleges’ ability to attract top talent to key positions, opponents say. Those arguments join criticisms of other pieces of the tax plan that could directly affect students, such as ending student loan interest deductions, eliminating part-time students’ ability to receive education tax credits and imposing new taxes on tuition assistance.

As a whole, the tax plan is notable for the numerous ways it targets higher education in order to pay for Republicans’ political priorities, like cutting corporate taxes and simplifying the individual tax code. That likely signals a difficult political path ahead, according to some observers who see wealthy institutions as actors that have long abused a friendly tax code and have now missed their chance to reform their behavior and negotiate in good faith over policy changes. To many in higher education, the proposals represent a punitive slap at institutions serving the country in many ways.

Of the proposals that would directly affect colleges’ institutional operations, the elimination of tax-exempt private-activity bonds would have one of the widest-ranging impacts. Institutions across the country make use of the bonds, for which state and local governments issue tax-exempt conduit bonds on behalf of private colleges and universities. Colleges, not governments, back the bonds, but the tax exemption lowers their cost of borrowing.

Take away access to the municipal bond market, and colleges would have to pay more to borrow and build.

“The bonds would be taxable, so the interest rate that the university would have to pay to the person who lends them money would increase, meaning their debt cost would increase,” said Charles A. Samuels, a lawyer at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, who represents the National Association of Health and Educational Facilities Finance Authorities. “Any facility they built would be more expensive, or would have to be lessened or delayed in some way as they find the revenue for it.”

The tax plan’s change to municipal bonding would affect other nonprofit organizations as well, so many expect other interest groups to fight it. Nonprofit organizations, including colleges and universities, relied on tax-exempt financing in order to raise $554 billion for capital projects between 2003 and 2012, according to a 2013 study conducted for NAHEFFA. Completely eliminating the interest tax exemption would have cost nonprofits an extra $166.3 billion over that time period.

Another proposal in the GOP plan affecting a broad swath of institutions is an excise tax on high earners at private tax-exempt organizations. A 20 percent excise tax would be charged on all compensation in excess of $1 million paid to an employee. The tax would apply to organization’s five highest-paid employees.

All remuneration would be included, according to Brian Pinheiro, a partner at Ballard Spahr LLP. But additional regulations would likely have to be written to determine what compensation is included and how. For example, many believe deferred compensation would be included under the proposal. But the legislation as written does not directly address how to count deferred compensation that has not yet vested.

Regardless of those details, the excise tax would affect some of the most visible leaders at the country’s most well-known institutions.

“You’ll have coaches and athletic directors and presidents of universities,” Pinheiro said. Institutions that operate hospitals could see doctors subject to the tax.

The other excise tax in the bill, on private colleges’ endowment earnings, has come under particularly intense scrutiny as wealthy colleges and universities levy blistering attacks against it. The tax would affect about 150 private institutions with endowment values of at least $100,000 per full-time-equivalent student. That would include many of the most famous institutions in the country, such as Harvard, Princeton, Stanford and Yale Universities, and the Massachusetts Institute of Technology. Public universities would be exempt from the endowment tax because they are not subject to the internal revenue code.

The National Association of College and University Business Officers attacked the idea as effectively punishing colleges and universities that have a stable private revenue stream. A university with an endowment valued at $100,000 per student currently would spend about $5,000 per year per student from its endowment, assuming a standard 5 percent spending rate.

That spending on students could be curtailed by an excise tax. Colleges and universities would either have to divert money from students, spend a larger portion of their endowments or increase their endowments’ rate of return in order to pay the excise tax. Endowments are intended to exist forever, so institutions resist drawing down their overall size over time.

Critics aren’t just arguing against the idea of an excise tax. They’re arguing against the way this one would be structured.

A $100,000-per-student cutoff fails to account for the many different types of institutions that would be subject to the excise tax, said Liz Clark, NACUBO director of federal affairs, during a Friday conference call. At many universities, large endowments fund public services like research, libraries and medical education. Significant portions of those endowments are restricted by donor agreements for those and other specific purposes.

“The calculation is based on a false understanding of endowments and how colleges and universities put them to work,” Clark said. “It fails to reflect the complete and comprehensive mission that many colleges and universities have.”

Princeton uses its endowment earnings to pay for more than half of its annual budget, Robert K. Durkee, the university’s vice president and secretary, said in an email. Students from families earning less than $56,000 per year pay nothing for tuition, room and board at Princeton. Endowment earnings help to pay for academics and services so that students can graduate without debt.

In other words, universities’ tax exemptions encourage quality in higher education.

“This proposal would overturn that time-tested policy solely to add revenues to the federal treasury,” Durkee said.

A spokesman from Yale University also argued the Republican proposal would be taxing resources funding student aid, teaching, research and community service.

“It is disappointing that the legislation relies so heavily on colleges and universities, and especially the universities with some of the strongest records on financial aid, to raise revenue to enable tax cuts,” said the spokesman, Thomas Conroy, in an email.

It should be noted, however, that Yale’s endowment earned a return of 11.3 percent for the year ending June 30, growing its value to $27.2 billion. Princeton’s endowment earned a rate of return of 12.5 percent, pushing its value to $23.8 billion.

At a 5 percent spending rate, each of those endowments would contribute more than $1 billion to institutional operations. That’s about as much as the public University of Connecticut’s entire 2017 operating budget. Yale enrolls about 12,000 total students and Princeton enrolls about 8,000. UConn enrolls about 32,000.

Pressures to grow endowments are real, resulting in competition for top talent as endowment managers. Many managers could be working on Wall Street, so wealthy universities often end up paying members of their endowment management teams more than $1 million.

When the public sees those salaries and high endowment values, it could make it harder to argue against the proposed taxes.

“I am the lone guy while arrows come at me,” Charles Skorina, who recruits investment managers for endowments at his firm Charles Skorina & Co, told CNBC. “Salaries are too high and endowments are too big: end of story. That's what people say. But if you tax education salaries and endowment earnings, you really are hurting schools.”

Proposals to tax executive salaries and endowments are nothing new. But some recent proposals from Republican lawmakers had appeared to take a more incentive-based approach. A proposal from Tom Reed, a Republican from upstate New York, had proposed requiring colleges and universities with endowments of more than $1 billion to use a quarter of their earnings for grants for students or face taxes.

Such nudges toward behavior lawmakers consider desirable is largely missing from the current tax proposal. The tax plan is instead intended to apply similar rules to private endowments as it does to private foundations. It is intended to protect taxpayers from subsidizing bonds that benefit private organizations.

There is an argument that universities have too much of a tax advantage over other types of organizations, said Jason Delisle, a resident fellow focused on higher education financing at the conservative American Enterprise Institute. But he also said the current proposal is asking liberal institutions to put their money where their mouth is -- instead of saying someone else should pay higher taxes, universities will have to pay higher taxes.

“They kind of have an equity and fairness argument, but I wouldn’t completely rule out the sort of rhetorical victory someone might be willing to claim here,” Delisle said.

The budget proposal could also signal a much more vindictive stance by lawmakers toward higher education. Some see wealthy universities as having spent years taking advantage of tax benefits in order to build up their own wealth and prestige -- but without enrolling enough new low-income students. Now, Republicans seem to be saying colleges missed their chance.

The proposal seems to be a reflection of colleges and universities that were only able to come up with sand in the works when lawmakers probed their practices previously, said Dean Zerbe, who was senior counsel to the U.S. Senate Finance Committee when Republican Senator Chuck Grassley criticized wealthy university endowments and broached the idea of minimum spending requirements a decade ago.

“I think the ship’s kind of sailed now for the universities,” he said. “I think it should be a sobering lesson for them going forward.”

Experts cautioned that the tax plan is still in the proposal stage. Its exact impact on higher ed can’t yet be quantified, said Susan Fitzgerald, senior vice president at Moody’s Investors Service.

“I will say, there is nothing there that we could really view as being a shock to the system,” she said. “The only thing we are fairly confident we can say is there are likely to be changes to what’s been proposed.”

Terminating private activity bonds would generate $38.9 billion over 10 years, according to estimates from the Joint Committee on Taxation. Another bonding change that would hit nonprofit institutions, repealing advanced refunding bonds, would bring in $17.3 billion over that time period.

The excise tax on investment income at private colleges would raise $3 billion, and the excise tax on nonprofits’ executive compensation would generate $3.6 billion.

Colleges have also charged that plans to double the size of standard tax deductions and limit charitable deductions for many taxpayers will hurt their ability to raise money. Additionally, they worry that limitations on state and local income tax deductions could lead to cuts in taxes and spending at those levels of government, leading to cuts in public higher education.

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