Congress targets elite university endowments with 6% tax, but calls it 'Woke'
S. 936 — WEST Act of 2025 · Filed by Tom Cotton (R-AR) · Introduced Mar 11, 2025 · Referred to committee
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What it does
This bill imposes a new 6% annual excise tax on the investment endowments of large private colleges and universities—those with assets exceeding $11.9 billion (or $10.5 billion for state-operated institutions)—starting in 2025. The tax applies only to endowment assets not directly used for educational purposes. Religious colleges are exempt. The revenue collected would flow to the federal government.
Why we flagged it
The bill's core mechanism is a straightforward 6% excise tax on large private college endowments. The operative text is plain, but the title's use of 'Woke' signals political framing rather than neutral policy language.
What the text implies
- The tax applies only to endowment assets not 'directly used' in educational purposes—a definition that may be subject to interpretation and potential litigation over what qualifies as direct use.
- Religious colleges are explicitly exempted, creating a potential Establishment Clause question about whether the government is favoring religious over secular institutions through tax policy.
The full analysis lists 5 implications of this text.
Who stands to gain
U.S. federal government (revenue recipient)