Yesterday, the U.S. House of Representatives introduced its tax reform legislation; voting will begin on Monday, Nov. 6. Marquette wants the university community to be aware of this, because the bill contains several items that — if passed — will have a significant negative impact on higher education, students and families. Those specific provisions are outlined below. (A section-by-section summary of the bill, which includes additional provisions that may impact higher education, is available online.)
At a time when Congress and the American people are asking institutions of higher education to control cost increases, such provisions will only put further pressure on institutions, students and families. The U.S. Senate is expected to introduce its bill next week; Republican leadership aims to have its tax reform bill become law before Christmas 2017.
Marquette is in communication with congressional representatives, and we are also working with national and state associations on tax reform issues of concern.
House bill provisions that will negatively impact higher education:
- Charitable giving
The bill would double the standard deduction for those filing jointly to $24,000 and it would impose limits on charitable giving in a significant way.
Benefactors who choose to give to a college are doing so to educate the next generation of leaders. As noted by both the American Council on Education and the Association of American Universities, “The basic principle underlying the charitable income tax deduction for gifts is that taxpayers should not be taxed on income that does not benefit them directly — because they give that income away to support the public good.”
Tuition only covers a portion of the costs of education; scholarship funding through the prudent distribution of endowment earnings via charitable giving significantly helps decrease the costs to students. In fiscal year 2017, Marquette distributed nearly $23.6 million in scholarship aid from endowment income and charitable donations.
- Endowment Tax
The House bill would impose a 1.4-percent excise tax on private university endowment earnings for institutions whose endowments total at least $100,000 per student. For Marquette, this would equate to an endowment of just over $1 billion. While such a measure would not impact Marquette at the moment, it would impact us in the future as we meet our endowment goals. More broadly, this measure would have devastating effects on private institutions across higher education. Since students are a leading beneficiary of endowments through financial aid packages, the proposed legislation will directly harm students and their families.
Endowments are catalysts for the many ways in which universities positively impact our world. They fuel academic and scholarly excellence and innovation, and increase affordability for students. This measure would not only diminish those efforts, it would disadvantage private universities, thus weakening some of the nation’s strongest contributors to cures, innovation, scholarship, and to the training and experience of students who will shape our future.
- Tax-exempt tuition remission
Under the proposed bill, universities’ previously tax-exempt tuition remission benefit would be fully taxable. This benefit is one of the leading ways universities like Marquette attract and retain world-class talent, as well as further our mission as an institution of higher education. Nearly 200 Marquette employees currently have dependent children at Marquette or another Jesuit institution who receive a tax-free tuition benefit. An additional 175 Marquette employees or spouses take advantage of tax-free tuition remission.
Marquette also has more than 500 master’s and doctoral students who are currently supported through some form of graduate assistantship (teaching assistants, research assistants and graduate assistants). Under the proposed legislation, all of this would be taxable.
If you want to take action, please contact your Congressional representatives:
You can find your House representative at: house.gov/representatives/
You can find your U.S. senator at: www.senate.gov/senators/contact/
Sen. Ron Johnson: (202) 224-5323
Sen. Tammy Baldwin: (202) 224-5653
Feel free to use these suggested talking points:
I am calling to respectfully ask that Representative/Senator [Name] request the removal of several items in the tax reform bill that will severely harm higher education and college costs. Please do not tax private college and university endowments or limit charitable contributions that help to reduce college costs.
Tuition only covers a portion of college costs and institutions use their endowments to provide financial aid through the generous support of their donors.
Please retain the tax-free tuition benefits for dependents, graduate, research, and teaching assistants, and via employer-sponsored tuition remission. These are long-standing benefits, all of which were made permanent. These are incentives that help with the development of our future workforce.