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campus considerations

Democrats reject bills threatening tax penalties on colleges and universities

Two bills, which Republicans said would punish schools failing to combat antisemitism by targeting their tax benefits, passed the Ways and Means Committee along party lines; Democrats argued the bills are ill-conceived and ineffective

Bill Clark/CQ-Roll Call, Inc via Getty Images

Rep. Jason Smith (R-MO), chair of the House Ways and Means Committee

The House Ways and Means Committee split along partisan lines on Tuesday over two bills that Republicans said would punish colleges and universities for campus antisemitism by imposing tax penalties and potentially reassessing their tax-exempt statuses. 

Both bills, the University Accountability Act and the Protecting American Students Act, passed the committee by party-line votes. Democrats argued that the bills were not serious or effective efforts to combat antisemitism.

The University Accountability Act would impose tax penalties on colleges and universities when a federal court finds that they have violated Title VI of the Civil Rights Act, which bans discrimination based on race, color and national origin. Those penalties, enforced by the Internal Revenue Service, would total $100,000 or 5% of the total of their administrative salaries, whichever is greater.

If a school is found to have violated Title VI on three separate occasions, the Treasury Department would be required to review the school’s tax-exempt status.

Rep. Jason Smith (R-MO), the committee chair, argued that colleges and universities, in failing to protect Jewish students, are not fulfilling the educational purpose for which they receive tax exempt status, and should be subject to penalties.

“It’s time that these universities learn their inaction has consequences,” Rep. Nicole Malliotakis (R-NY), the bill’s lead sponsor, added. “They have a responsibility to keep their students safe.”

Democrats argued that the bill was rushed and ill-conceived, and would largely not address current issues. They said that increased funding for the Department of Education’s Office of Civil Rights, which evaluates and adjudicates Title VI complaints, would be a better approach to the problem.

Rep. Brad Schneider (D-IL) said that the proposal takes an insufficiently tailored approach and emphasized the need for education.

“This bill fails to address the issue head-on and focuses on punishing schools instead of working to improve them,” Schneider said. “I’m concerned about this bill’s unintended consequence: the very real potential for creating a vicious cycle of aggressive and tendentious claims against universities.”

The Orthodox Union supported the bill, arguing in a letter to committee leaders that it would “give strength and meaning to the demands of Title VI and hopefully compel recalcitrant administrators to do what they ought to already.”

The Protecting American Students Act would change the way that taxes on college and university endowments are assessed, with the goal of incentivizing schools to admit more American citizens or permanent residents, and fewer non-citizens. Schools with larger non-citizen populations would be subject to taxes on their endowments. Smith said the bill would expand endowment taxes to around a dozen additional schools.

Smith and other Republicans, suggesting that antisemitic activity is being driven in significant part by non-American students, argued that incentivizing wealthy, elite schools to increase their populations of American students would help protect against antisemitism.

“Universities — many of whom have ever-growing foreign student populations and receive massive amounts of foreign funding — focus more on appeasing those with antisemitic views on their campuses than protecting all students, upholding their institutional values and holding those accountable who violate such policies and values,” Smith said.

Republicans also argued that schools should be incentivized to admit more U.S. students for other reasons as well, and that the change would also align tax policy with Department of Education policy for determining student aid eligibility.

Rep. Judy Chu (D-CA) and other Democrats said that the proposal was both xenophobic and would fail to actually address antisemitism.

“Instead of protecting victims of hate this bill would simply blame campus unrest on supposed foreign agitators and use this as an excuse to punish institutions that enroll international students regardless of where they come from,” Chu said. “Scapegoating these students does not represent a solution to antisemitism or other forms of discrimination. In fact, it does the exact opposite by blaming all foreigners for society’s ills.”

Rep. Drew Ferguson (R-GA), the lead sponsor, acknowledged that the bill alone will not solve campus antisemitism, but said, “I think it’s a matter of fairness to the American taxpayer and to American students.”

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