I have an odd sense of humor, I admit, but when my wife told me about this bill (she works for the Minnesota Senate) I couldn’t stop chuckling.
At first glance, you may not be as amused as I am, but hear me out. The bill in question is SF 3194, and it was heard in the Tax Committee yesterday.
The Minnesota Senate is, of course, controlled by the Democrats, and as Democrats, they are always up for a good tax increase. During the last session, with a state surplus amounting to something around a third of state expenditures, they still managed to spend it all and raise taxes even higher.
If they aren’t raising taxes or spending money, they like to spend their time accusing Republicans of the most dastardly acts, and one of their favorites is accusing us of trying to deny children and college students an education.
The reality is quite different, although I have to admit that I hate the current iteration of “higher ed,” which is little more than indoctrination.
Still, what makes SF 3194 amusing is that it proposes to tax the capital gains of private schools with endowments, and the wealthier the schools, the higher the tax rate. Schools with significant endowments will be required to pay a 25% rate on money that is, to be clear, entirely notional. Capital gains one year, unless realized, can disappear the next.
These schools are nonprofits, and as far as I can tell, they will retain their nonprofit status. They will be, however, subject to taxes nonetheless.
AS you can imagine, the private colleges are in a tizzy, and my alma mater, Carleton College, is fit to be tied. As the wealthiest of the schools, they understandably are unhappy to have their endowments taxed by the state and redistributed as the legislature sees fit.
As a hotbed of DEI and radical politics, I can make the case that the IRS should strip it of its tax-exempt status due to violations of federal laws–what Trump is threatening to do to Harvard–and that is what makes this so funny. Not only is taxing unrealized capital gains a horrible economic policy, which isn’t funny, but the Minnesota legislature is trying to do to private colleges what Trump is doing to Harvard.
The reasons are different, of course. This is a pure money grab, while Trump would be happy to leave Harvard alone if they would only enter a consent decree to follow federal law.
But in most respects, the consequences would be the same: money taken out of the pockets of the wealthy institutions. Minnesota Democrats justify it with gauzy references to “privilege” and “social justice,” but they are just as interested as Trump in whacking the colleges and universities for their purposes. Trump, to uphold the law and crush the DEI cancer; Minnesota Democrats to steal from the rich and give to their constituents.
Ironically, it’s likely that almost every single person who will get hit by this ridiculous tax is an avid socialist or Democrat. The colleges will have to become MORE elite, as they will need to suck the student body even more dry to keep their gravy train going, and all the “beneficiaries” of the redistributed money will wind up no better off.
Perhaps my amusement is unique, but I love the fact that the greed of Democrats is leading them to steal from their most loyal constituency. It is delicious.
