Nov. 30, 2017: Tax Reform Proposal Impact
As you likely know, there are real-time negotiations occurring in Washington, D.C., and across our country regarding tax reform proposals being debated in Congress. Today, I would like to share how it might affect current and future students, their families, Creighton University, and higher education in general.
The U.S. House of Representatives passed the “Tax Cuts and Jobs Act” two weeks ago, and the Senate is nearing a vote on its own version. While many parts of the final bill might change as the debate continues, I am particularly concerned by provisions in the House plan that might find their way into any final legislation. These provisions include:
The elimination of the qualified tuition reduction: Currently, educational institutions are able to provide employees and their spouses or dependents with tuition reductions that are excluded from taxable income. These reductions also extend to graduate students engaged in teaching or research as part of their academic programs. Under the House legislation, these tuition reductions would be considered taxable income.
The elimination of tax-free tuition benefits: Currently, employers are allowed to offer their employees tuition assistance up to $5,250 annually that is excluded from taxable income. Under the House legislation, this assistance would be considered taxable income.
A repeal of the student loan interest deduction: This deduction is used by many in our community who are, or will soon be, paying off student loans. Eliminating it will further burden those students who need to utilize loans to fund their education.
An end to access to the market for tax-free bonds: Access to tax-exempt financing enables many not-for-profit institutions, including Creighton, to invest in infrastructure that supports the educational needs of our students. Eliminating the ability to rely on tax-exempt financing will increase the University’s cost of financing much-needed capital projects.
An annual 1.4 percent excise tax on endowment investment income: This tax would hinder the ability of Creighton and other universities to invest in the future of our institutions and provide adequate financial support to students. Although it appears Creighton would not immediately be subjected to this proposed tax, its imposition could impact our ability to grow the endowment, and would eventually limit the endowment’s ability to fund financial aid and support operations. This provision appears in both the Senate and House bills and thus is highly likely to be included in any final legislation.
Led by Government and Community Relations Director Chris Rodgers, and supported by me, Provost Tom Murray, and many other members of the University’s administration, Creighton’s efforts in this matter began when the House bill was introduced several weeks ago. Nationwide, colleges and universities have been working through their associations and/or members of Congress on committees with tax jurisdiction. Also, the Association for Jesuit Colleges and Universities has been engaged in the conversation from the beginning.
If you have your own thoughts regarding provisions in the tax bill, I encourage you to become engaged in the process and contact your elected officials. Colleges and universities, and our students, should not be asked to shoulder the cost of tax reform, and additional barriers should not be placed in the way of providing and financing higher education in our nation.
Creighton is a university with a very bright future, and we care deeply about our students and their access to Jesuit higher learning. Together, we should never stop advocating for them.
Rev. Daniel S. Hendrickson, SJ