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Cotton calls for tax rise on deep-pocket schools

by Frank E. Lockwood | May 14, 2021 at 7:03 a.m.
U.S. Sen. Tom Cotton is shown in this file photo.

WASHINGTON -- A proposed $2 billion yearly tax increase championed by U.S. Sen. Tom Cotton, R-Ark., would raise funds for apprenticeship programs by taking money away from some of the nation's wealthiest private universities, including his own alma mater.

The Ivory Tower Tax Act, which Cotton introduced this week, would affect institutions that teach "un-American ideas," he said in a written statement.

The Dardanelle native, who earned an undergraduate degree from Harvard in 1998 and a juris doctorate from Harvard Law School in 2002, told Fox News that his legislation targets "liberal" schools that have taught their students to "hate America."

Cotton declined requests for an interview with the Arkansas Democrat-Gazette.

Cotton's 1% tax on endowments would apply to private schools with endowments worth more than $500,000 per full-time student and more than $2.5 billion overall.

Harvard, which awarded $645 million in financial aid and scholarships during fiscal 2020, has the most to lose if Cotton succeeds. Its $41.9 billion endowment is the largest of any school in the country, and its annual tax would be $419 million, assuming the endowment's value remained unchanged.

[DOCUMENT: Read Sen. Tom Cotton's proposal to tax university endowments »]

A Harvard spokesperson said the school would have no comment "at this time."

Other Ivy League schools would also be heavily taxed, as would Stanford University in California.

The University of Notre Dame, with a $12 billion endowment, would avoid the tax raise because of its affiliation with the Catholic Church. The legislation includes an exemption for institutions that are "religious in nature."

Appearing on Fox News before introducing the bill, Cotton said the schools are "actively indoctrinating students to hate America, to believe it's an oppressive racist nation."

"Our wealthiest colleges and universities have amassed billions of dollars, virtually tax-free, all while indoctrinating our youth with un-American ideas," Cotton said in a written statement Tuesday. "This bill will impose a tax on university mega-endowments and support vocational and apprenticeship training programs in order to create high paying, working-class jobs."

The legislation would also require the schools to distribute at least 5% of their endowments each year. Otherwise, they would face financial penalties.

Legislation backed by congressional Republicans and signed into law by President Donald Trump in 2017 had already placed a 1.4% excise tax on the schools' net investment income.

As a candidate for Congress, the senator signed the Americans for Tax Reform's "Taxpayer Protection Pledge" promising to oppose any net tax increases, the organization says on its website.

Asked whether Cotton has violated his pledge by proposing billions of dollars in additional taxes over the next decade, his spokesman, James Arnold, denied that the Ivory Tower Tax Act breaks any campaign promises.

While Cotton has labeled it a tax, the Ivory Tower Tax Act "isn't a tax hike -- it closes a loophole and protects taxpayer dollars from funding a woke agenda," Arnold said in a written statement.

The targets of the proposal were never the intended beneficiaries of Cotton's Taxpayer Protection Pledge, Arnold said.

"Senator Cotton signed the pledge to protect working Arkansas families from unfair taxes -- not the billion dollar endowments of universities who teach their students politically-motivated lies about our nation and its history."

The senator has repeatedly criticized the nation's schools for promoting what he calls "racially divisive" theories, including the concept of systemic racism in American society.

He has been particularly critical of curricula linked to the 1619 Project, which reframes American history so that slavery and its consequences are the focal point.

(A group of enslaved Africans were brought to the Virginia Colony in 1619, arriving one year before the Pilgrims reached Plymouth Rock.)

Harvard was founded in 1636 by the Great and General Court of the Massachusetts Bay Colony so that it could promote "knowledge and godliness," its original charter stated.

Cotton, a graduate of Dardanelle High School, spent his undergraduate years at Harvard, working on the school newspaper, "The Crimson," and earning a bachelor's degree in just three years.

Cotton "did not receive financial aid from Harvard," Arnold said.

After studying briefly at Claremont Graduate University in California, Cotton returned to New England, this time to study law.

The Cambridge, Mass., campus environment was liberal, but not stifling, he would later recall.

"While I always felt that I was in the minority of political opinion to the extent I expressed Republican and conservative opinions, I never felt like it was a beleaguered or oppressed minority or a minority that might face repercussions for expressing unpopular opinions," he told a Harvard Law School forum in October 2017.

In classrooms and in other settings, Cotton said he could express his opinions "fully and frankly."

"I just think it shows Harvard's commitment to learning," he said. "Part of learning is being exposed to new ideas and sometimes those ideas are uncomfortable, whether they're the ideas of your peers or ideas that you discover from great thinkers who've written books from different times and different cultures with different ways of thinking."

These days, however, Cotton's portrayal of his alma mater is less flattering.

"Senator Cotton believes most American universities no longer encourage the exchange of differing political opinions, to the detriment of students and the country," Arnold said. "Unfortunately, Harvard is not an exception to this trend."

Asked by the Democrat-Gazette at her Thursday news conference whether President Joe Biden would favor Cotton's Ivory Tower Tax, White House press secretary Jen Psaki said, "If he's trying to raise money for something, then our view is there's lots of ways to do that. We know that a number of corporations hugely benefited financially during the pandemic. They could pay more taxes. We think the highest 1% of Americans can pay more taxes. And if he wants to have a conversation about worker training, we'd love to have him over and have that conversation."

Asked about Cotton's criticism of the private universities, Psaki said, "Without much detail of where he thinks our youth are being indoctrinated, it sounds very mysterious and dangerous."

Educating students about systemic racism is not "indoctrination. That's actually responsible," she added.

In a tweet later in the afternoon, Cotton wrote: "Psaki is wrong. Pushing toxic critical race theory on kids is indoctrination. And the Biden administration is doing it from the White House."

State Sen. Clarke Tucker, D-Little Rock, whose time as a Harvard undergraduate overlapped with Cotton's time as a law student, said it's "very surprising" to see Cotton pushing for billions of dollars in new taxes.

"This seems like an absolute gimmick to try to get attention and headlines for a future presidential race than it is actually doing something to help the people of Arkansas with the issues they're facing in their lives every day," he said.


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