Washington University Chancellor Troubled By GOP Tax Bill

ST. LOUIS, MO — Tax reform cleared a major hurdle today as the U.S. House of Representatives passed a massive rewrite of the tax code. A Senate bill is making its way through committee on the other side of the Capitol Building, and some differences will have to be settled before a final bill to a vote. But, some in higher education are worried about the bill's implications.

The House bill would repeal several major deductions that benefit students, including the student loan interest deduction. Currently, interest on student loans is tax deductible, saving people who have borrowed money for college upward of $600 a year. The American Opportunity Tax Credit, which allows parents to deduct money the spend to send their kids to college, and the Lifetime Opportunity Credit, which benefits those who take longer to graduate are also on the chopping block.

The bill also makes significant changes to what is considered taxable income. Many colleges offer tuition wavers for graduate students or for employees and their families. Under proposed rules, those wavers would be treated as taxable income, which could put higher education out of the reach of many Americans.

Mark S. Wrighton, chancellor of Washington University in St. Louis, sent a letter to the House last week expressing his concern with many of the tax bill's provisions. “These policies have helped students obtain their college degrees and encouraged employers to help employees gain skills to advance their careers,” he wrote. “They have enabled graduate students to earn PhDs and then go on to make tremendous contributions to our economy, public health, national security and our fundamental understanding of the world. A Jobs Act should not erect additional barriers to higher education.”

Changes to charitable deduction rules will also jeopardize donations to universities and other non-profit organizations, Wrighton said. And the elimination of tax exempt financing rules will force non-profits to pay higher borrowing costs and prevent them from refinancing tax-exempt bonds to take advantage of lower interest rates.

The legislation, he said, "sets an incredibly dangerous and needless precedent that takes resources from non-profit educational institutions for no other reason but to meet other unrelated government revenue needs."

Critics have charged the Republican tax bill takes money from universities, students and the middle class in order to finance a massive tax cut for corporations and the wealthy. According to the non-partisan tax policy center, nearly half of new cuts would go to the top one percent of income earners, and as many as a quarter of middle-class Americans could actually see their taxes go up due to eliminations of educational deductions, local tax deductions, adoption credits and the like.

The bill will also add $1.5 trillion to the deficit over the next decade, according to the Congressional Joint Committee on Taxation.

Photo: Demonstrators join a rally against the proposed Republican tax reform legislation on the east side of the U.S. Capitol Building November 15, 2017 in Washington, DC. (Chip Somodevilla/News/Getty Images)