Final Push on Tax Reform Nears
Now that the House and Senate have approved separate tax bills, select members from each chamber will meet in a conference committee to resolve differences. A final bill will then be sent back to the full House and Senate for a vote. While the majority appears on track to send a final bill to President Trump ahead of their self-imposed “before the holidays” deadline, it remains uncertain whether the votes exist to pass a common bill that addresses enough of the concerns of individual members and factions on the Hill.
Florida congresswoman Kathy Castor will serve on the House-Senate conference committee. Senate appointees to the panel have yet to be made public. Other individual representatives and senators are now reaching out to leadership and conferees to express or reiterate their priorities for the final bill. The next few days will be key to achieving the best viable outcome for students and institutions of higher education, which at present is generally the Senate version of tax reform.
The Senate-version that was approved early last Saturday morning doesn’t contain the provisions that would most negatively impact students. As widely reported, the House bill includes a repeal of the tax-exemption for tuition waivers and other employer-provided tuition assistance. The House bill also proposes a repeal of the deduction for student loan interest and ending the Lifetime Learning Credit. Such provisions were absent from both the early Senate draft and their most recent product. The Senate-approved bill also differs from the House bill in maintaining private activity bonds that universities use to help facilitate the construction and renovation of facilities.
The Senate-approved bill does contain some issues that could prove costly to institutions of higher education. While our community was successful in the push to remove a new tax on university activities (i.e. logo/name royalties) deemed unrelated to the core mission, a provision did remain requiring unrelated business income tax (UBIT) to be computed separately for each activity rather than as an aggregate –removing the ability to offset tax liability across an institution. For-profit corporations are generally allowed to apply losses in one area to offset gains in another when computing their tax liability. The Senate-approved tax bill also repeals the partial deduction for donations made in exchange for seating rights at athletic events.
Concern also remains that pushing individuals towards the standard deduction and away from itemization, as both the House and Senate bills do, will serve as a disincentive to charitable giving.
Members of Congress from both sides of the aisle have expressed an interest in fixing the provisions that negatively impact students during the House-Senate conference process. However, there are presently no guarantees of such an outcome.
Association of Public and Land-Grant Universities Letter on Tax Bill Conference