Senate Passes Tax Reform Overhaul

The U.S. Senate narrowly passed legislation early Saturday morning to overhaul the tax code in a 51 to 49 vote. The massive bill includes several controversial measures related to higher education, The Chronicle of Higher Education reported.

The House approved its version of the tax reform bill last month in a 227 to 205 vote.

Both the House and Senate bills would create significant potential new tax burdens for higher education institutions and would, college leaders predict, adversely affect charitable giving and state budgets that support public colleges and universities.

Both measures are widely opposed by higher education leaders who are concerned that many of the proposed provisions will make a college degree less attainable and hurt the financial strength of institutions. However, many in higher education view the House version as substantially more harmful for students and colleges than the Senate bill, according to Inside Higher Ed.

The legislation now moves into conference for negotiations over significant differences between the two bills. Lawmakers will have to reach agreement on a number of higher education issues including graduate student tuition waivers, other student tax credits and deductions, investment income tax, and charitable deductions, among other things, reported the Chronicle.

The tuition waivers many graduate students receive would be taxed under the House bill. The Senate bill would leave graduate student waivers untaxed.

The House bill would eliminate the deduction, of up to $2,500, for interest paid on student loans; the Hope Scholarship Tax Credit, worth up to $2,500; the Lifetime Learning Credit, of up to $2,000; and the $5,250 corporate deduction for employee education assistance plans. The Senate bill would not eliminate any of those benefits.

Both the House and Senate versions of the tax reform bill include a tax on the investment income of a select group of colleges. The House bill would tax institutions that enroll at least 500 students and have assets of $250,000 per full-time student, which would affect approximately 65 colleges. The final version of the Senate bill would narrow the pool of institutions affected—to fewer than 30 colleges—by increasing the threshold to those that have assets of $500,000 per full-time student.

The House bill would increase the standard deduction from $12,700 to $24,000 for joint filers and from $6,350 to $12,000 for individuals. Charitable groups say the change will reduce the incentive for charitable giving to entities like colleges, Inside Higher Ed reported. The Senate legislation would increase the standard deduction to $24,400 for joint filers and $12,200 for individuals.

 

Related Links

The Chronicle of Higher Education

https://www.chronicle.com/article/Passage-of-Senate-Tax-Reform/241962

Inside Higher Ed

https://www.insidehighered.com/news/2017/12/04/tax-bill-key-implications-colleges-clears-senate