House and Senate Republicans are continuing to work to pass a tax bill by the end of the year.
Congress is back from the Thanksgiving holiday and House and Senate Republicans are continuing to work to pass a tax bill by the end of the year. The focus this week is on the Senate, where the bill approved along party lines by the Committee on Finance Nov. 16 could be up for a floor vote soon.
An analysis released on Sunday by the nonpartisan Congressional Budget Office said that the Senate version of the Tax Cuts and Jobs Act gives substantial tax cuts and benefits to Americans earning more than $100,000 a year while leaving the country’s poorest worse off, which The Washington Post says may complicate plans for passage. Politico reported this morning that at least half a dozen GOP senators are showing varying levels of concern about the legislation.
On the higher education front, the Senate bill retains the student benefits eliminated in the House version of the bill passed on Nov 16. But other problematic provisions remain, including those reducing charitable giving, changing the SALT deduction, repealing tax-exempt bonds, and creating an excise tax on private college and university endowments.
The Tax Cuts and Jobs Act and Endowments
While the vast majority of the nation’s 4,700 colleges and universities do not have significant endowments, colleges and universities with larger endowments use those resources to provide substantial student financial aid to enhance access, particularly for low- and middle-income students. Institutions also depend on their endowments to support new and emerging fields of study and research, along with nearly every aspect of an institution’s operation.
In a letter to The Wall Street Journal Nov. 20, ACE President Ted Mitchell explained that far from helping higher education, this excise tax would “inevitably diminish the resources available for student financial aid, teaching and research.”
“A tax is a tax,” Mitchell wrote. “A tax on endowments will take money from institutions of higher education and transfer it to the federal government to help finance corporate tax cuts. So while it’s true that an endowment tax would “benefit” someone, it would not be colleges or their students.”
Mitchell also sent a letter today to Majority Leader Mitch McConnell and Minority Leader Charles E. Schumer on 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.
ACE and the entire higher education community will continue communicating with both the House and Senate on how these bills will impact students, families, and institutions as the process moves forward.
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.