Bowdoin is one of about 70 private colleges and universities that would be affected by the implementation of a tax included in the House Republicans’ tax proposal.
The tax overhaul approved by House Republicans on Monday proposes a 1.4 percent excise tax on the net investment income of college endowments. The provision is limited to private institutions with endowments worth at least $250,000 per student. With around 1800 students, and an endowment valued at $1.46 billion, Bowdoin’s approximate $811,000 per student is far above the threshold.
The Senate’s version of the bill revealed late Thursday night retains the provision.
Though the details of the tax plan remain unclear, a tax of 1.4 percent on this year’s entire 12.4 percent endowment returns could mean a tax of over $2.3 million, which would significantly impact the College’s operating budget.
Scott Hood, senior vice president for communications and public affairs, said in an email to the Orient the tax would reduce the resources the College can devote to student aid.
“Nearly half of our endowment is restricted to the support of student financial aid, generating about $25 million for need-based aid last year. This new tax would leave us with less money to allocate to financial aid. It would also slow our ability to expand the number of students on aid and our ongoing efforts to provide support to both low- and middle-income families,” wrote Hood.
According to Hood, President Clayton Rose has communicated the College’s concerns with members of Maine’s congressional delegation including Susan Collins and Angus King regarding the proposed tax.
“There are other troubling provisions in the House proposal but none more concerning to us than the plan’s impact on student aid. President Rose has made this case to members of the Maine congressional delegation and the College is working with its peers and with other groups to explain fully how this tax would affect educational opportunity,” wrote Hood.