Tax Reform and Higher Education resource page allows campus leaders, students, and others to write members of Congress
During
the tax reform debate, ACE and nearly 50 other higher education
associations expressed serious concerns with both the House- and
Senate-approved versions of H.R. 1, the Tax Cuts and Jobs Act, noting
that overall both bills would make college more expensive and erode the
financial stability of public and private, two-year and four-year
colleges and universities.
ACE today sent a letter to
the House-Senate conference committee negotiating a final bill that
reiterates those concerns. The letter notes that the Senate bill
represents an improvement over the House measure and recognizes the
importance of many of the provisions important to students and their
families.
However, it recounts strong objections about
proposals in both bills that change the standard deduction in ways
projected by the Joint Committee on Taxation to significantly reduce the
use of the charitable deduction, with a concomitant loss of charitable
gifts, which will harm all nonprofit institutions, including colleges
and universities. Also in both bills, the changes to the state and local
tax deduction would likely harm state budgets and lead to decreased
state investment in public higher education.
Another issue of strong concern to higher
education is that both the House and Senate measures include a 1.4
percent excise tax on the endowments of some private colleges and
universities. The House bill would tax colleges and universities that
enroll at least 500 students and have assets of $250,000 per full-time
student, which is approximately 65 institutions. An amendment to the
Senate bill narrowed that pool to institutions with assets of $500,000
per full-time student, which is approximately 30 institutions. The
concept of an excise tax on endowments is fundamentally flawed and takes
money that institutions use for student aid, faculty salary, research,
and other educational purposes and shifts it to the U.S. Treasury in
order to help pay for corporate tax cuts.
Other issues of concern to higher education include:
- Both the House and Senate bills would repeal advance refunding
bonds, while the House bill would also repeal private activity bonds.
Both programs are used by colleges and universities to lower the overall
cost of funding for large infrastructure projects and save taxpayer
dollars.
- The Senate bill would require institutions to compute unrelated
business income tax (UBIT) separately for each trade or business in a
so-called “basketing” fashion. This would require all losses and gains
to be calculated by activity rather than in the aggregate, resulting in
disparate treatment for nonprofit institutions.
The letter states, “In sum, we write today to
express our continued strong opposition to the provisions in the House
and Senate bills that will negatively impact students and their families
and impedes the innovative research that helps drive our local, state,
and national economy.”
For more information on the tax legislation
and to use a Contact Congress tool to write lawmakers about specific
provisions, see the Tax Reform and Higher Education resource page.