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.