Republicans Propose $5 Trillion Tax Cut, 21% University Endowment Tax

The Republican Party has introduced a sweeping tax bill, affectionately referred to as "The One, Big, Beautiful Bill" by Donald Trump. This legislation encompasses over $5 trillion in tax reductions, with the primary goal of extending the 2017 Tax Cuts and Jobs Act and fulfilling several of Trump's campaign pledges. One of the most striking provisions is the proposed increase in taxes on university endowments. Currently, the tax rate on these endowments stands at 1.4%, but the new bill seeks to raise this rate to as high as 21%. This tax increase would be progressive, with wealthier institutions facing higher rates. For instance, universities with endowments ranging from $500,000 to $750,000 would be subject to a 7% tax rate, while those with endowments between $750,000 and $1.25 million would face an even higher rate.

The bill also includes measures to enhance the State and Local Tax (SALT) deduction, which was previously limited to $10,000 under the 2017 tax law. Furthermore, the legislation proposes the elimination of certain green energy tax credits, a point of contention among Republicans. Additionally, the bill includes a provision to exempt tips and overtime pay from taxation for the duration of Trump's term, along with an extra $4,000 in tax relief for individuals.

The overall package is designed to balance these tax cuts by generating revenue through other means, such as increasing taxes on university endowments and foundations. The bill has garnered mixed reactions, with some Republicans hailing it as a benefit for the working class, while others have criticized it as a handout to the wealthy. The legislation is anticipated to encounter substantial opposition in the Senate, where Democrats hold a narrow majority. However, with the backing of Trump and other influential Republicans, the bill stands a chance of being passed.

In summary, the proposed tax bill by the Republican Party, known as "The One, Big, Beautiful Bill," includes over $5 trillion in tax cuts, a significant increase in taxes on university endowments, enhancements to the SALT deduction, the elimination of certain green energy tax credits, and additional tax relief for individuals. The bill aims to offset these tax cuts by raising revenue through other means and has received mixed reactions from Republicans. Its passage in the Senate, where Democrats hold a slim majority, remains uncertain despite support from Trump and other influential Republicans.