Lauren Libby (Ph.D. Candidate, Yale), Theories of University Endowment Taxation, 103 Wash. U. L. Rev. 991 (2026) (reviewed by Mirit Eyal (Alabama) here)
University endowment taxation is now one of the most significant issues in U.S. federal tax policy, and it only promises to grow in prominence over the next four years. Yet while growing criticism of university wealth has precipitated a wave of proposed tax legislation, policymakers and scholars have largely avoided engaging with the deeper political questions that lurk behind this new trend in federal tax policy. Instead, discussions about I.R.C. § 4968—the Code’s current “endowment tax”—are either dominated by antagonistic rhetoric or concerns about administrative feasibility, revenue generation, and the potential for tax-avoidance. And although President Donald Trump and Vice President JD Vance seem eager to make the endowment tax a central part of their executive agenda, no one has meaningfully or systematically assessed the normative issues at the heart of § 4968 and proposals for its reform.
This Article provides the first conceptual framework for addressing the fundamental political questions implicated in the endowment tax debate.
Calls for and against taxing university endowments directly challenge the political status of private American universities. They reflect a growing desire to redefine these institutions’ obligations to the public and their relationship with the state. And unfortunately, the prevailing discourse on the Code’s current endowment tax has obscured these broader ideological stakes. This Article aims to correct for this oversight by identifying the core political concepts that structure and influence the network of federal tax laws responsible for recognizing and governing private universities and their financial practices. Drawing on scholarship on political theory and corporate governance, this Article constructs a framework for evaluating and comparing the most recently introduced proposals for reforming the federal endowment tax, and in turn assesses how different approaches to endowment taxation reflect and reinforce competing visions of the university’s role in American society. By reframing discussions about endowment taxation in terms of first principles, this Article suggests new ways of thinking about some of the most recent and popular endowment tax reforms.
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