Congress taxes elite universities for investing in U.S. adversaries—but punishes all holdings.
S. 2045 — Protecting Endowments from Our Adversaries Act · Filed by Pete Ricketts (R-NE) · 2 cosponsors · Introduced Jun 12, 2025 · Referred to committee
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What it does
This bill imposes a 50% excise tax on private colleges and universities with endowments over $1 billion when they acquire investments in companies on U.S. government adversary lists (Commerce Department Entity List, Military End User List, Unverified List, or FCC Covered List), and a 100% tax on net income from short-term holdings of such investments. The bill aims to prevent elite universities from profiting from investments in entities deemed national security risks.
Why we flagged it
The bill's operative mechanism is a targeted excise tax on university endowment investments in entities linked to U.S. adversaries, framed as a national-security measure rather than a revenue or endowment-control measure. The title accurately reflects this purpose.
What the text implies
- The 100% tax on net income from 1-year holdings of listed investments may incentivize universities to divest entirely from compliant holdings, reducing market liquidity and potentially destabilizing prices for those securities.
- Universities may shift investment strategies away from diversified index funds and ETFs that inadvertently hold listed-entity interests, increasing compliance costs and reducing passive-investment accessibility.
The full analysis lists 5 implications of this text.
Who it affects
The bill serves a stated national-security purpose by discouraging university investment in adversary-linked entities, which may align with public interest in preventing capital flows to geopolitical rivals. However, the 100% tax on short-term income from compliant holdings is punitive and may reduce endowment returns, ultimately harming students through higher tuition, reduced aid, and diminished institutional resources—a concrete cost to the public that uses these universities.