Bill Text: NJ A3886 | 2016-2017 | Regular Session | Introduced
Bill Title: Imposes 2.5 percent tax on certain endowment income of private institutions of higher education in State.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2016-06-06 - Introduced, Referred to Assembly Higher Education Committee [A3886 Detail]
Download: New_Jersey-2016-A3886-Introduced.html
Sponsored by:
Assemblyman TIM EUSTACE
District 38 (Bergen and Passaic)
SYNOPSIS
Imposes 2.5% tax on certain endowment income of private institutions of higher education in the State.
CURRENT VERSION OF TEXT
As introduced.
An Act imposing a tax on certain income of endowment funds of private institutions of higher education in the State and supplementing Title 54 of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. There is imposed on a private institution of higher education in this State, and on a foundation or other similar organization related to that institution, a tax of 2.5% on the annual net investment income, as defined in subsection (c) of section 4940 of the federal Internal Revenue Code (26 U.S.C. s.4940) of the endowment fund of that institution, foundation, or organization, determined as if the institution, foundation, or organization was a private foundation subject to tax pursuant to 26 U.S.C. s.4940.
b. As used in this section:
"Private institution of higher education" means an institution of higher education organized as a nonprofit corporation under N.J.S.15A:1-1 et seq., and acting under the authority of and licensed by the State to confer degrees pursuant to N.J.S.18A:68-1 et seq.
c. The Director of the Division of Taxation shall collect and administer the tax imposed pursuant to this section. The director shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) adopt any rules and regulations as the director deems necessary to carry out the provisions of this act.
d. (1) There is established in the General Fund a special account to be known as the "Higher Education Endowment Earnings Account" that shall be in the custody and control of the Department of the Treasury"
(2) The State Treasurer shall annually credit monies collected pursuant to this section to the "Higher Education Endowment Earnings Account."
(3) The Legislature shall annually appropriate all funds credited to the "Higher Education Endowment Earnings Account" established pursuant to this subsection to pay debt service on the bonds issued pursuant to the "Building Our Future Bond Act," (P.L.2012, c.41). Upon the redemption and payment of all bonds issued pursuant to P.L.2012, c.41, the Legislature shall thereafter annually appropriate all funds credited to the "Higher Education Endowment Earnings Account" to the Secretary of Higher Education for the support of higher education programs in the State.
2. This act shall take
effect immediately.
STATEMENT
This bill imposes a tax on certain annual earnings of endowment funds of private institutions of higher education in the State, and their related foundations or similar organizations. The tax imposed by the bill is equal to 2.5 percent of the annual net investment income, as defined by section 4940 of the federal Internal Revenue Code, of the endowment fund, determined as if the institution, related foundation or similar organization was a private foundation subject to taxation pursuant to section 4940. A private institution of higher education is defined by the bill as an institution of higher education organized as a nonprofit corporation under N.J.S.15A:1-1 et seq. and acting under the authority of and licensed by the State to confer degrees pursuant to N.J.S.18A:68-1 et seq.
The revenues from the tax are to be credited to a specific account in the General Fund, named the "Higher Education Endowment Earnings Account," which is also established by the bill. The tax is to be collected and administered by the Director of the Division of Taxation, who may promulgate rules to carry out the provisions of this bill.
The bill provides that the Legislature annually appropriate all revenues from this tax to pay debt service on the bonds issued pursuant to the "Building Our Future Bond Act," which was passed by referendum in 2012. The term of those bonds is 35 years from the date of issuance. Following the redemption and payment of all "Building Our Future" bonds issued, the Legislature is to thereafter annually appropriate all revenues from the tax for the support of higher education programs in the State, as provided by the bill.
The bill takes effect immediately upon enactment.
