WASHINGTON — As Republicans' sweeping tax bill moved toward adding a new tax on colleges with large endowments, including several in Pennsylvania, Sen. Pat Toomey (R., Pa.) added a late amendment Friday night to offer some relief.
However, Democrats said his plan would help just one school, far from his home state: conservative Hillsdale College in Michigan.
Democrats pounced on the amendment in a sharp debate on the Senate floor, attacking the plan as Republicans pressed for a vote on their sweeping overhaul of tax policies.
"There are so many deserving schools in Oregon and Pennsylvania and elsewhere who don't get this special treatment," Sen. Ron Wyden (D., Ore.) said during an 11-minute exchange between Toomey and four Democrats. "I can't find anybody else in America who benefits from this particular provision, and that doesn't strike me as right, to have it air-dropped at the last minute into a bill."
Toomey defended his proposal, saying it would provide tax benefits for any college that chooses not to accept federal student aid — and therefore saves the government money.
"A college that chooses to not put that imposition on federal taxpayers ought to be able to be exempt from this tax," Toomey said. "It would be available to any college that makes that choice."
Democrats, however, said only Hillsdale now makes that choice and has an endowment large enough to be threatened by the proposed tax. In a sustained attack they acidly added that Hillsdale is generously supported by the family of Education Secretary Betsy DeVos.
Late Friday night, however, after the floor fight, the GOP bill changed, raising the threshold for colleges facing the tax, likely sparing several near Philadelphia, and possibly Hillsdale — which would make Toomey's plan moot.
Before that, five Pennsylvania schools appeared to be facing a tax on their endowments due to the initial GOP plan, according to two people familiar with the issue: the University of Pennsylvania, and Haverford, Swarthmore, Bryn Mawr, and Lafayette Colleges. In New Jersey, Princeton University and the Princeton Theological Seminary were facing the tax.
At issue was a proposed tax on private universities with endowments larger than $250,000 per student. Republicans wanted to add a 1.4 percent tax on those endowments to help pay for the other tax cuts in their bill. But the GOP changed the criteria late Friday night so the tax would affect schools with endowments larger than $500,000 per student. Several of the Pennsylvania schools were likely to avoid the levy because of that change. Hillsdale might also avoid it.
Many colleges had raised the alarm about the tax, some saying it could cost them millions.
The plan "will take money away from needy students and vital college operations," the presidents of Haverford, Bryn Mawr, and Swarthmore recently wrote to Pennsylvania lawmakers.
Penn, with an endowment that tops $12 billion, could see the largest hit in Pennsylvania, if it faces the tax.
Hillsdale's student newspaper recently wrote that the tax hike could cost their school $700,000.
Democrats have accused Hillsdale of refusing federal aid so it could escape federal antidiscrimination rules, particularly those intended to protect gays and lesbians.
"We don't have a fond opinion of discrimination and of giving a tax provision for just one college that happens to be funded by one of the wealthiest families in America because they happen to be a Republican donor," said Sen. Jeff Merkley (D., Ore.).
Democrats held up the amendment as a symbol of what they said were giveaways tucked into a massive bill voted on late at night, with little time to review the final measure.
Toomey reiterated that any school could take advantage of the provision — if they decided to give up federal student aid. He did not answer directly when pressed on whether Hillsdale was the only current beneficiary.
"There are very few, probably, who choose now to forgo all of this taxpayer money," he said, "but any college in America that wanted to could do so."
His amendment was expected to be added to the GOP tax plan as part of a measure Republicans hoped to pass late Friday.