Baala Shakya, Photography Editor

Republican senators have proposed an 8 percent tax on investment returns for the richest universities such as Yale — a lower number than the 21 percent top endowment tax rate approved by the U.S. House of Representatives last month.

The Senate Finance Committee on Monday released its draft legislative text for the “One Big Beautiful Bill,” President Donald Trump’s massive legislative effort. Under the committee’s proposal, the maximum tax rate on endowment earnings would be 8 percent — 13 percent lower than the highest rate in the text passed by the House — for universities whose endowments are worth at least $2 million per student.

According to estimates by Phillip Levine, a Wellesley College economist, the 21 percent tax passed by the House could cost Yale $690 million a year. 

The 8 percent tax on endowment returns proposed by the Senate committee would still mark a nearly sixfold increase in the endowment tax. The current tax level, established in 2017, is 1.4 percent for schools with endowments of more than $500,000 per student.

“Until the legislation is finalized, much remains uncertain. Yale continues to advocate for higher education and its benefits to the nation, working alongside its partners,” Stephen Murphy ’87, Yale’s chief financial officer, wrote in an email to the News on Tuesday.

When asked for comment on the Senate’s proposed revisions, University President Maurie McInnis referred to her May 22 campus-wide email on the endowment tax.

In the message, sent the day the House passed the budget bill, McInnis called on students, faculty, staff and alumni to contact their congressional representatives and advocate against the endowment tax hike. She emphasized that Yale’s research output and ability to offer financial aid could be affected by the increased tax. 

Senate Republicans have not publicly detailed their reasons for softening the provision to increase endowment taxes.

The proposed Senate plan maintains the House’s tiered tax structure, which takes into account an institution’s “student-adjusted endowment” — the ratio between the total endowment value and the full-time student population. While the House had proposed a four-tier system, the Senate’s version outlines only three tiers.

The Senate’s revisions may complicate the bill’s path to Trump’s desk, given the tight margins in the House and the need for both chambers to agree to the same text. 

House Speaker Mike Johnson last month exhorted Senate leaders to keep revisions to a minimum after the bill cleared the House by just a single vote. Republicans in the House can only afford to lose three votes with a 220-212 majority.

In the weeks since the House approved the bill, the University has used social media to urge community members to “tell Congress to protect discovery and opportunity” and “speak up for the future.”

At a press conference organized largely by members of the Yale College Democrats in front of the United States Capitol on Thursday, Sen. Richard Blumenthal LAW ’73, Rep. Jim Himes and students from Yale and other universities condemned the Republican reconciliation bill, arguing that it would make higher education less affordable for students.

“This reconciliation bill is a dream killer, a job killer, a school killer,” Blumenthal said. “It ought to be defeated, and these students are here to make a difference, and they will make a difference because my colleagues are going to listen to them.”

Yale students received financial support from the University for travel costs to the press conference and coaching from the University’s federal relations office, organizers told the News.

As of June 30, 2024, Yale’s endowment was valued at $41.4 billion.

Clarification, June 18: This article has been clarified to reflect the role that members of the Yale College Democrats played in organizing a press conference at the Capitol; the club itself did not organize it.