Troubling tax reform

Legislation speeding through Congress would spell trouble for public higher education

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Over the past few weeks, the University of California and UC Santa Cruz have been closely following legislative proposals in Congress that would change federal tax law. Both UC and UC Santa Cruz have sent letters to California’s congressional delegation stating our deep concern with several provisions of the proposed legislation. In addition, we have formed coalitions with other public institutions nationwide to express our collective concerns about several onerous provisions in the proposals rapidly working their way through Congress. Please join us in these efforts.

On Nov. 16, the House passed HR 1, the Tax Cuts and Jobs Act, by a vote of 227-205. Simultaneously, in the Senate, the Committee on Finance approved a version of the Tax Cuts and Jobs Act. The full Senate could vote on the tax package as soon as this week. This legislation is moving rapidly, and we want to make all aware of some of the potential harm to public higher education and provide the resources for those who want their voices heard by Congress.

Students, consumers, residents, and citizens should know there are several provisions that could negatively impact them. Specific areas of concern to UC and UC Santa Cruz include:

Education Tax Benefits: UC is concerned the House bill repeals certain education tax incentives that benefit UC students and their families, helping them pay for college. In addition, it would impose taxation on tuition remissions for graduate students, significantly increasing their tax burdens.

Charitable Giving: The House and Senate bills seek to increase the standard deduction, which could disincentivize charitable support for higher education.

Tax Exempt Bond Financing: UC is concerned that repeal of tax-exempt Private Activity Bonds and Advance Refunding Bonds could make it more difficult to pursue capital projects that benefit students and faculty.

To pass a tax-reform bill in the Senate, only a simple majority would be needed because the Senate is operating under reconciliation rules. That means a filibuster-proof majority would not be needed for passage. Republicans, however, can afford to lose no more than two Republican senators to pass the tax package. It is too early to tell whether the Senate bill will have enough support to move forward in its present form.

As the Senate moves toward consideration, and with the prospect of a possible House-Senate process to reconcile differences between the two bills, UC and UC Santa Cruz continue to advocate against the many onerous provisions of these bills.

Please stay engaged and informed. To learn more information or how to send a letter or make a call to Congress, visit the University of California’s Advocacy Network (UCAN).

Now is a critical time to make your voice heard!