The Senate Committee on Finance released its version of the expansive Republican Party tax bill on Monday, pulling back on the controversial endowment tax and the so-called “revenge tax” while omitting the proposed tiered tax on private foundations.
The bill calls for raising the U.S. debt limit by $5 trillion, up from the House version increase of $4 trillion. That and other differences between the House and Senate versions of the bill could present roadblocks to passage and make Republicans’ self-imposed deadline of July 4 for Senate passage uncertain. The House version of the bill narrowly passed, and the Senate bill could afford only three defections, as Republicans hold a 53 to 47 majority in the Senate.
The Senate bill is largely the same as the version that cleared the House last month, focusing on the extension of 2017 tax cuts and cutting Medicaid.
What’s in
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Endowment Tax: The endowment tax proposal remains in the Senate bill but has been scaled back. Excise tax rates would hold steady at the current rate of 1.4% for private universities with an endowment-per-full-time-student ratio between $500,000 and $749,999. For those with an endowment of $750,000 to $1.99 million per student, the tax would rise to 4%. It would max out at 8% for universities exceeding $2 million in endowment assets per full-time U.S.-based student. The House version of the proposal went up to a 21% tax.
Section 899: Known as Section 899 or the “revenge tax,” the provision intended to raise taxes on foreign investments in the U.S. also remains in the Senate tax bill but has been pared down. The Senate’s version would cap the tax increase on foreign countries to 15%, down from the House proposal of 20%. The new version would also delay its implementation until 2027, compared with the House version’s 2026 start date.
Third-Party Litigation: This new provision, not seen in the House version, creates new tax rules for outside investors who fund lawsuits in exchange for a cut of the winnings. It imposes a high tax on their profits, removes favorable tax treatment—like capital gains—and requires law firms or parties to withhold part of any payout to cover taxes. It applies to deals starting in 2026 and also includes rules to prevent loopholes.
Trump Accounts: Originally called “MAGA Accounts” before a late switch to “Trump Accounts,” the proposal would create new, tax-exempt investment accounts meant to benefit children. The Senate version closely resembles the House proposal that allows $5,000 in contributions annually, which beneficiaries could later use to purchase homes, start a business or pay for an education. It also would offer a pilot program providing a one-time $1,000 government payment into accounts for U.S. citizens born from 2025 through 2028.
What’s Not
Private Foundation Tax: The Senate’s tax bill does not include a tiered tax hike on private foundations, which was proposed by the House. The House’s provision would have capped the tax at 10% of realized gains for foundations with at least $5 billion in assets.
The committee would need to vote on the bill to advance it further.
Tags: Congress, Endowment, tax bill
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