Senate Democrats on Friday successfully blocked a provision in the Republicans’ sweeping tax bill designed to give a special tax break to a conservative college in Michigan.
Democrats said the tax break was designed to help just one politically-connected school: Hillsdale College in southern Michigan.
“I can’t find anybody else in America who benefits from this particular provision. That doesn’t strike me as right,” said Sen. Ron Wyden, D-Ore.
Sen. Claire McCaskill, D-Mo., said, “It feels like this is a very limited provision written for a very special person.”
The tax package would impose a new tax on investment income earned by some private universities and colleges. Sen. Pat Toomey, R-Pa., added a provision exempting certain colleges that don’t receive federal funds. Democrats said Hillsdale was the only college that would benefit.
Toomey defended Hillsdale as “a wonderful institution” and said other schools might qualify for the tax break, too. Toomey said a school that declines federal funds saves taxpayers “a tremendous amount of money.”
“I do understand that my colleagues on the far left do not have fond opinion of Hillsdale. But I do. I actually think it’s a wonderful institution,” Toomey said.
Sen. Jeff Merkley, D-Ore., proposed an amendment to strip the tax break for Hillsdale and it prevailed by a 52-48 vote.
Four Republicans joined all Senate Democrats in voting to adopt Merkley’s amendment. They were Sens. Deb Fischer of Nebraska, Susan Collins of Maine, Lisa Murkowski of Alaska and John Kennedy of Louisiana.
The defeated levy covered private colleges whose endowments are worth more than $250,000 per full-time student, according to a Bloomberg analysis. Hillsdale’s endowment cleared more than $500 million earlier this year, according to the student newspaper. It had fewer than 1,500 students last year, giving it a student-to-endowment ratio of more than $300,000.
That means it would have to pay the 1.4 percent tax on its investments made in the endowment every year.
Democrats complained that some well-known conservatives have connections to the school, including Trump administration Education Secretary Betsy DeVos.
Graduates include Erik Prince, who is DeVos’ brother and the founder of the government contractor once known as Blackwater, and former Rep. Chris Chocola of Indiana. Chocola once headed the conservative Club for Growth, an advocacy group that Toomey also once led.
Other schools do not take federal funds, including Grove City College, an influential conservative institution north of Pittsburgh, in Toomey’s home state.
For now, however, Grove City does not have to pay the 1.4 percent tax and therefore would not benefit from the Toomey provision. Its enrollment is 2,400 and its endowment is $104 million, according to U.S. News. So it’s endowment-per-student ratio is less than $44,000, well below the required $250,000 level.
The Washington Post contributed