Senate strikes amendment giving tax exemption for Betsy DeVos's old college

Senate strikes amendment giving tax exemption for Betsy DeVos's old college

The Senate voted to strike an amendment from the Republican tax bill that would have benefited a small Christian college in southern Michigan with ties to education secretary Betsy DeVos.

In a surprise 52-48 vote, four Republicans supported an amendment offered by Democrat Jeff Merkley to remove the exception from the legislation. The decision came after Democrats raised the issue in a contentious exchange on the Senate floor.

Pennsylvania Republican senator Pat Toomey defended the provision, which would exempt Hillsdale College from an excise tax on universities and colleges with large endowments.

“I do understand that my colleagues on the far left do not have fond opinion of Hillsdale – but I do,” Toomey said. “I actually think it’s a wonderful institution.” He added that the university saves taxpayers a “tremendous amount of money” by refusing federal aid.

Hillsdale College is a conservative liberal arts college based in central Michigan that enrolls about 1,400 and focuses its curriculum around “western philosophical and theological inheritance”.

The university boasts high-profile conservative alumni, including DeVos and her brother, Erik Prince, the founder of Blackwater as well as former congressman Chris Chocola, a Republican of Indiana. Chocola succeeded Toomey as president of the Club for Growth, a conservative organization focused on cutting taxes.

In a sustained back-and-forth, Toomey argued that any university could benefit from the amendment if it refused federal aid.

“A college that chooses to not put that imposition on federal taxpayers ought to be able to be exempt from this tax,” Toomey told the Democrats. “It would be available to any college that makes that choice.”

“I can’t find anybody else in America who benefits from this particular provision. That doesn’t strike me as right,” Senator Ron Wyden, a Democrat of Oregon, retorted. “There are so many deserving schools in Oregon and Pennsylvania and elsewhere who don’t get this special treatment.”

The Democrats said that only Hillsdale appeared to be the only college that had an endowment large enough that refused federal student aid. Democrats have accused the school of refusing government aid to avoid complying with federal regulations preventing discrimination based on sexual orientation.

Michigan Democrat senator Claire McCaskill scoffed: “This is a very limited provision written for a very special person.”

Chuck Schumer, the Senate minority leader, called the Hillsdale exemption a “metaphor” for the Republican tax plan.

“A single wealthy college, the pet project of a billionaire campaign contributor to the Republican party exempted by a [senator] who fought to get rid of earmarks,” Schumer said. “This unfortunately is the metaphor for this bill and how high the stench is rising in this chamber as we debate the bill tonight.”

Republicans had initially proposed a 1.4% tax on endowments of $250,000 or more per student as part of their sweeping, $1.4tn tax plan. In a late-change, the final version raised the threshold to $500,000 per student.

Hillsdale has an endowment of $548m, which breaks down to roughly more than $350,000 per student, according to its student newspaper, which would not have qualified under the finalized version. Republican Senators Susan Collins, Lisa Murkowski, Deb Fischer and John Kennedy voted in favor of the amendment. Its passage eliminated the carve out from the tax plan, which subsequently passed the Senate in an early morning vote on a Saturday.

This article originally appeared on The Guardian

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