US universities brace for spending cuts in face of tax increase
Leading US universities are bracing for deep spending cuts to offset an upcoming increase in the endowment excise tax despite posting double-digit investment returns this year.
More than a dozen institutions have adopted austerity measures — from hiring pauses to suspended capital projects — as they face a sharp increase in taxes on endowment income from next July.
While their endowments all reported higher returns in the 12 months to June, compared with the previous year, the gains are unlikely to offset the impact of the tax increase, said university officials.
The shortfall has fuelled budget cuts that threaten to weaken one of the country’s greatest strengths — its higher education system — at a time when it is already under attack from the Trump administration.
“I think it is economically suicidal,” said Owen Zidar, an economics professor at Princeton University, “higher education is one of the key engines of prosperity in America and stifling it is really quite counter-productive.”
