Early Wednesday morning, after more than 17 hours of debate, the House Ways and Means Committee voted to advance out of committee the legislative package containing a slew of President Trump’s top tax priorities. The panel advanced the legislation in a 26-19 party-line vote after rejecting numerous Democratic-led amendments.
The tax bill now heads to the House Budget Committee, which is tasked with combining all the portions of the Trump agenda bill into one package in advance of its consideration in the entire chamber.
The 389-page package makes the income tax rates from the Tax Cuts and Jobs Act of 2017 permanent and implements some of the president’s campaign promises, including no tax on tips or overtime through 2028 and a temporary increase of the child tax credit.
This bill also includes the Republican proposal to increase the endowment tax on some universities. Under the 2017 law, private universities with endowments of over $500,000 per student were subject to a 1.4% tax. The current GOP package creates a tiered excise tax system that would significantly increase taxes on some universities:
- 1.4% tax for schools with endowments between $500,000 and $750,000 per student.
- 7% tax for schools with endowments between $750,000 and $1.25 million per student.
- 14% tax for schools with endowments between $1.25 million and $2 million per student.
- 21% tax for schools with endowments above $2 million per student.
The bill also narrows the definition of students counted for tax calculations. International students on temporary visas and undocumented students will be excluded from the count, increasing the tax burden on institutions with large international student populations.
Crucially, the endowment tax would still only apply to private universities, although some religiously affiliated institutions will be exempt.
While voting the package out of committee is a significant step, there remains a strenuous process ahead of GOP leadership as they seek passage of the reconciliation legislation. The Ways and Means portion must be packaged together into one “big, beautiful bill” by the House Budget Committee before being voted on by the entire House, which will be difficult given concerns from different GOP factions and the razor-thin margin in the House. If the bill does manage to pass, it will be subject to potentially significant changes in the Senate, where it will also face staunch Democratic opposition.
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