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Stanford’s tax bill is projected to grow to $1.1 billion over the next five years under President Donald Trump’s national spending bill that was signed into law in July.
The law dramatically raised taxes on private universities with large endowments. Before 2017, private universities paid no federal tax. Trump then raised that to 1.4%. Now, universities with more than $2 million per student will pay 8% on their endowment.
The conservative think tank American Enterprise Institute projected which universities will be subject to this higher rate, based on current endowment assets, enrollment and investment income.
It found that about 20 universities will be subject to the tax next year. The only university from California is Stanford, as well as Ivy League schools.
The American Enterprise Institute projects that Stanford could pay $1.1 billion over the next five years.
The San Francisco Chronicle notes that the university’s tax bill otherwise would have been $175 million.
Anticipating these changes, Stanford announced that it plans to lay off 363 employees.
This story was written by Emma Gallegos for EdSource. The original version of this article can be viewed here.
