To be so similar, there are a lot of differences between the House and Senate’s versions of Tax Reform, especially when it comes to higher education. Shortly before the Thanksgiving recess, the House passed H.R. 1, the Tax Cuts and Jobs Act. In the Senate, a similar Tax Reform Bill was adopted by the Senate Finance Committee and is scheduled for floor debate and voting when the Senate returns during the week of November 27.
While both bills are aimed at cutting taxes and stimulating the economy, there are broad differences in the paths that each body has mapped out. Perhaps the biggest difference is the Senate’s inclusion of a provision to effectively repeal the individual mandate in the Affordable Care Act (also known as ACA or “Obamacare”).
Since our focus is non-profit higher education, SCICU and its member colleges and universities are most concerned about those provisions in both versions of tax reform that will make it more costly for students and parents to access a college education or more difficult for independent higher education institutions to hold down costs.
The House bill is the more onerous of the two. The House bill would eliminate student loan interest deductions, eliminate employer-provided education assistance, eliminate tax-free private activity bonds, and eliminate tax-free tuition assistance for many faculty, staff, and graduate assistants. These long-standing provisions were meant to encourage savings for higher education, help student and families pay for college, and assist with the repayment of student loans.
The Senate Finance Committee bill avoids taxing families and students, but similar to the House, proposes a new excise tax on private college endowments and increases taxes on unrelated business income.
Both the House and the Senate intend to increase standard deductions. By doubling the standard deduction for individuals and families, charitable deductions would be out of reach for 95% of taxpayers. One group estimates that this could reduce giving to charitable non-profits by $13 billion or more each year. That is why SCICU and other non-profit organizations are urging Members of Congress to support the Universal Charitable Giving Act which establishes a universal charitable deduction for individual and married couples who do not itemize beyond the standard deduction.
SCICU is joining with national groups like the National Association of Independent Colleges and Universities (NAICU) and the Coalition of Christian Colleges and Universities (CCCU) to encourage lawmakers to look more deeply into the adverse impact these proposed cuts will have on our nation’s educational attainment goals and the development of a 21st century workforce.
The on-going concerns of South Carolina’s independent colleges and universities are laid out in a second letter to Senators Graham and Scott. We will continue to work in the best interests of our members and the students and families who continue to seek a high quality, personal, and values-based education at a private non-profit college or university.