Legislation championed by congressional Republicans to overhaul the nation’s tax code appears poised to become law soon, possibly as soon as Wednesday. The U.S. House of Representatives and the U.S. Senate approved the legislation on Tuesday, and in a revote on Wednesday because of a technicality, the House approved it again. The measure now goes to President Trump, who is expected to sign it into law.
The legisation does not include some of the more controversial provisions that appeared in either its original House or Senate versions, such as a tax on graduate students’ tuition waivers, but it still contains several provisions that have been a cause for worry among people in higher education.
Here, briefly, is what you need to know about the soon-to-be-new tax law. It would:
- Double the standard deduction, which could discourage charitable giving, because charitable deductions can be used only when tax filers do not take the standard deduction.
- Impose a 1.4-percent excise tax on the investment earnings of some large private-college endowments. (Explore which colleges will be affected.)
- Institute a 21-percent tax on annual compensation in excess of $1 million paid to any of a nonprofit organization’s five highest-paid employees.
- Eliminate a deduction that sports fans may take for “seat-license fees,” which for many big-time college-sports programs is a key revenue stream with ticket sales.
And here are background stories from The Chronicle to provide context for and analysis of the legislation:
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GovernmentNew Tax Law Takes Aim at Higher Education’s Millionaires Club
In 2015, private nonprofit colleges minted 158 millionaires. Their institutions would have to pay a 21-percent tax. -
Finance
A Small College With a Big Endowment Gets Snared in Tax Bill
Kentucky’s Berea College, which charges no tuition and serves primarily low-income students, will probably have to pay a 1.4-percent tax on its endowment earnings after a revote on tax legislation. -
News
Final Tax Bill Would Spare Some Higher-Ed Worries, but Could Lead to State Budget Cuts
The Republican legislation is headed for votes in Congress without a tax on graduate-student tuition waivers but with a tax on big college endowment earnings. -
News
Proposed Tax on Graduate Students’ Tuition Waivers Appears to Be Dead
A conference committee, convened to reconcile differing House and Senate versions of tax legislation, was reported to have dropped the controversial proposal. -
Government
The Brief Life and Undignified Death of the ‘Hillsdale Carve-Out’
As the Senate’s tax-reform bill barreled toward a vote, an obscure amendment that would have benefited just one college entered the picture. This is its story. -
Government
Passage of Senate Tax-Reform Bill Leaves Colleges Scrambling
As lawmakers prepare to hash out the differences in bills passed by both chambers of Congress, here’s what each would mean for higher ed. -
Government
Higher Ed Hates the GOP Tax Proposals. Here Are 3 Reasons Why.
At the top of the list are plans to tax tuition waivers for graduate students and other college employees, to remove incentives for charitable giving, and to tax the investment earnings of some private-college endowments. -
News
If Republicans Get Their Way, These Colleges Would See Their Endowments Taxed
Roughly 140 private colleges and universities would pay 1.4 percent of their net investment income under the House’s bill. Under the Senate’s bill, that number would shrink to about 27. -
Finance
Republican Tax Proposal Gets Failing Grade From Higher-Ed Groups
The planned overhaul would place new tax burdens on colleges and students, and some critics argue that it could undermine charitable giving to the institutions. -
The Review
Tax Reform That Students, Colleges, and Our Country Can’t Afford
Legislation on the fast track in Congress would have damaging consequences by discouraging private philanthropy, ramping up taxes on students, and undermining university research and innovation.
