Democrats threaten Yale with tax if school makes deal with Trump

A group of Democratic legislators in Connecticut with degrees from Yale University are threatening the school’s tax-exempt status if leaders make a deal with the Trump administration over probes into admission practices.

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Yale President Maurie McInnis acknowledged last week that the school is communicating with the Department of Justice as part of a process to engage in seeking a “voluntary resolution” over admissions investigations at the medical, law and undergraduate colleges. 

The New Haven-based school is already facing a larger federal tax on its $44 billion endowment. Yale and a handful of private peer institutions will owe 8% of net investment earnings, up from 1.4%, after a provision in the One Big Beautiful Bill Act introduced a tiered tax structure. Early estimates put Yale’s increased tax burden at $300 million annually. 

Connecticut tried to tax Yale’s endowment in 2016, but the bill lacked enough support. Now, the legislators said they would reconsider special privileges granted to Yale if the school enters an agreement with the DOJ, and are threatening to introduce legislation to eliminate Yale’s special statutory tax exemption. 

Eight Democrats in the Connecticut legislature urged Yale “in the strongest possible terms” not to negotiate, according to a July 16 letter to McInnis. 

“If Yale demonstrates that it will not use its wealth, standing and legal strength to defend the very freedoms its charter and tax privileges were granted to protect, the General Assembly could revisit that bargain in earnest, and potentially with our support,” according to the letter, whose lead author is Yale Law School graduate Matt Blumenthal.

Yale didn’t immediately respond to a request for comment on the letter. 

Democrats hold the majority in both legislative bodies in Connecticut. The lawmakers said that Yale, founded in 1701, enjoys tax privileges in Connecticut “found nowhere else in state law.”

A group of faculty, students and alumni are also urging the school not to settle with the Trump administration. 

The Justice Department issued findings in May that said Yale used race to discriminate in medical school admissions after a 2023 Supreme Court ruling prohibited doing so. The Justice Department said Yale’s use of race resulted in a Black applicant having as much as 29 times higher odds of getting an interview for admission than an equally strong Asian applicant with similar academic credentials.