Bill Introduced to Target Endowment Investment in Chinese Companies

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A bill was introduced in the House Thursday that would encourage universities with large endowments to divest from entities from China that contribute to human rights abuses or other entities listed on the U.S. government sanctions list that pose a national security threat.

Under the Protecting Endowments From our Adversaries Act, any private college or university with an endowment larger than $1 billion with investments in entities added to a U.S. sanctions list would be subjected to a 50 percent excise tax on the principal investment. If the entity remains on the list for over a year, it bumps up to a 100 percent excise tax.

Representative Greg Murphy, a Republican from North Carolina, announced in May that he was drafting the bill. Some sources familiar with the matter have said that these sorts of investments are an uncommon practice. However, supporters of the bill, such as Athenai Institute, a student-led organization that works to combat involvement from the Chinese government in higher education, say that it would create more transparency with reporting of foreign investments in endowments, which are difficult to track.

“These billion-dollar, tax-advantaged university endowments have a moral obligation to divest from companies that are detrimental to the safety and security of the United States,” said Murphy in a statement.

In response to the news that the bill would be drafted, Pedro Ribeiro, vice president for the Association of American Universities, which represents the nation’s top research universities, said, “We are currently reviewing the legislation and share Representative Murphy’s goal of protecting our national security and defending human rights. AAU universities are at the forefront of innovation that drives not only our economy but also our national health and security. We are committed to working with Congress to protect our immensely important work from undue foreign influence.”

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