Senate Republicans Unveil Their Version of Tax Overhaul

On Thursday night, Republicans in the U.S. Senate released their version of a plan to overhaul the tax code. The proposal is similar to the House bill unveiled last week, including several controversial measures related to higher education. However, the Senate plan omits other provisions of the House bill opposed by colleges and universities, Inside Higher Ed reported.

The Senate legislation echoes the House proposal's plan to impose a 1.4 percent tax on investment income earned by private colleges with more than 500 students and with endowments amounting to $250,000 per full-time student.

Senate Republicans also kept a provision that would reduce the number of people who can itemize their charitable contributions, from about 30 percent of filers to just 5 percent. The National Council of Nonprofits has estimated that the measure would cut charitable donations by some $13 billion annually, The Chronicle of Higher Education reported.

Additionally, like the House bill, the Senate version would eliminate the deduction on state and local income taxes and impose a 20 percent excise tax on the compensation of some highly paid employees of nonprofit organizations.

In contrast to the House plan, the Senate proposal avoids the elimination of several tax breaks for students. It would leave intact the deduction for student loan interest rates, the $2,000 tuition benefit under the Lifetime Learning Tax Credit, the $5,250 benefit for employer-paid tuition, and the Hope Scholarship Tax Credit. Also absent from the Senate bill is a proposed tax on the tuition waivers that graduate students receive when they work as teaching or research assistants.

The House Ways and Means Committee approved the GOP tax bill last week. The proposal now moves to the House floor for consideration. Meanwhile, the Senate Finance Committee aims to take up its version of the tax overhaul this week.

AACRAO joined a community letter to Senate Finance Committee leaders concerning the chamber's proposed legislation.

"We are pleased that the Senate bill retains the student benefits the House tax bill eliminates," the group of nearly 50 higher education associations stated. "However, we are deeply concerned about provisions in this bill that would negatively impact students and undermine institutions by reducing charitable giving, creating an unprecedented tax on private colleges and universities, increasing costs and the regulatory burden on many colleges and universities, reducing the ability to access tax-exempt bonds for capital projects, and threatening state investment in higher education."


Related Links

Inside Higher Ed

The Chronicle of Higher Education