The Senate Budget Committee on Tuesday advanced the chamber's version of the Tax Cuts and Jobs Act (S. 1), with two key Republicans voting for the measure after previously expressing concerns. ACE has written three letters to Senate leaders this week, urging them to reconsider their approach to higher education as they continue working on the legislation.
The bill was approved by a party-line vote of 12-11. The vote sends the measure to the Senate floor, where it could be considered as early as today in an effort to get legislation to President Trump's desk before the end of the year.
Two senators, Ron Johnson (R-WI) and Bob Corker (R-TN), reportedly were considering voting against the bill in committee if their concerns were not addressed. Johnson believed the bill did not do enough to help pass-through businesses, while Corker was concerned about the impact on the national debt. However, they ultimately voted in favor of the measure.
Impact on Higher Education
Although the Senate bill retains the student benefits the House bill eliminates, other problematic provisions remain, including those reducing charitable giving, changing the state and local tax (SALT) deduction, and creating an excise tax on private colleges and universities.
The Senate bill also would repeal the deduction for personal exemptions, including for college-age dependents. And while it would retain tax-exempt private activity bonds that are particularly important to private colleges and universities, the Senate measure would repeal advance refunding bonds, an important tool for institutions to refinance outstanding debt at lower interest rates, and broaden the tax on Unrelated Business Income (UBIT), increasing the regulatory burden, complexity, and cost.
Among the letters ACE sent to the Senate this week:
- Nov. 29: To express continued strong opposition to the provisions in the Senate bill that will make college more expensive and erode the financial stability of public and private, two-year and four-year colleges and universities.
- Nov. 28: To urge the Senate to reject provisions in the House version of the Tax Cuts and Jobs Act that repeal and make detrimental changes to education tax benefits that help millions of students and their families finance and repay a college education.
- Nov. 27: To encourage reconsideration of the endowment excise tax, referring Senate members to two articles discussing the fundamental flaws in the provision, one by Michael R. Strain, a scholar at the American Enterprise Institute, and the second by George Will.
The House voted 227-205 Nov. 17 to approve its version of the bill. Among the provisions ACE and the higher education community has raised objections to in that measure are:
- Sec. 1002: Changes to the standardized deduction, which will reduce charitable contributions to our institutions;
- Sec. 1002: Repeal of the Lifetime Learning Credit, while not substantially increasing the American Opportunity Tax Credit (AOTC);
- Sec. 1204: Repeal of the Student Loan Interest Deduction (SLID);
- Sec. 117(d): Repeal of the qualified tuition reduction;
- Sec. 127: Repeal of educational assistance programs;
- Sec. 1303: Changes to the state and local tax (SALT) deduction, which will reduce state budgets and, in turn, funding for public higher education;
- Sec. 3601: Termination of private activity bonds;
- Sec. 3602: Repeal of advance refunding bonds; and,
- Sec. 5103: Creation of a new excise tax on endowments at private colleges and universities.
For more information and to contact Congress on the Tax Cuts and Jobs Act, see the community’s Tax Reform and Higher Education resource page.