The One Problem with the Republican Tax Bill


With the Senate’s passage of Republicans’ much publicized tax reform bill, many conservatives are growing optimistic that Americans are on the verge of much needed tax relief. With the House version easily passing through that chamber last month, both sides will now go to conference to reconcile the bills and eventually send a final version to President Trump to be signed into law. While this appears to be a big win for the President and the Republican Party, there is at least one provision which conservatives should not be celebrating.

But first, it is important to emphasize that, overall, this is a good bill. Aside from simplifying the tax code, the proposed tax cuts for corporations and small businesses alike have the potential to free American industry and allow for a large increase in both employment and domestic wages. This is, no doubt, a fantastic development.

However, there is also one alarming blunder. It comes in the form of the proposed endowment tax targeting America’s universities — a provision which would impose a 1.4 percent tax on all university investment income for schools with endowments exceeding $250,000 per student (or $500,000 per student, in the Senate version).

Many on the Right have lauded this move as a providing a useful new tool for the cultural battle currently being waged in our country. Their argument goes something like this: almost all universities in the United States are bastions of leftism filled with Marxist professors who are instructing a generation of spoiled, lazy, socialism-loving college students to undermine the social fabric of America. Therefore, to combat this, Republicans must impose taxes to try and curb such behavior and deal a decisive blow to the Left’s cultural destruction.

Such a way of thinking is indicative of what this era of the GOP rule has brought us. Although this big government policy is far from conservative, it must nevertheless be praised because it helps the Right. But while this may seem like a win in the here and now, politics should be about principles, not victories. Conservatives should celebrate an accomplishment if, and only if, it is a win for the principles we value and promote. Otherwise, we are no better than those across the aisle.

The reality is that this endowment tax would be a further infringement of the federal government into Americans’ lives. While of course it is true that today’s universities make an absolute abomination of proper education, it is unclear how further government intervention — particularly in the form of a tax — would make this situation any better.

The real answer lies in more projects like Grove City College or Hillsdale College — institutions of higher learning that refuse federal funding altogether in order to remain independent of government meddling and instead pursue a true, American-based education. If, as conservatives, we begin to rely on the federal government to fix our problems, not only will we be sorely disappointed in the results, but even worse, we will have lost the limited government mission handed down to us since 1776.

Tax reform is an important, and now achievable, goal. Let’s not mar it by pushing more Big Government in the process.

Erik Halvorson

Erik Halvorson is a regular contributor to and a student at Hillsdale College.

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