Both the U.S. Senate and U.S. House have passed similar versions of tax reform legislation. The next step in the legislative process is for both chambers to agree on a single version of the Tax Cuts and Jobs Act and send it to President Trump for his signature. The reconciliation of differences falls to an appointed Conference Committee composed of members of both the House and Senate.
U.S. Senator Tim Scott was named to the Conference Committee by Senate Majority Leader Mitch McConnell. A graduate of SCICU member Charleston Southern University, Sen. Scott is personally familiar with the challenges of access and affordability in today’s higher education environment. SCICU has been in contact with Sen. Scott’s office to ensure that Sen. Scott and his tax team have the necessary information for him to advocate for common sense tax policies that would not increase the cost of a post-secondary education for students and their families or the higher education institutions that serve them.
The Senate’s version of the tax bill is less onerous than the House’s bill, so at this point, higher education advocates are urging Conferees to support most of the Senate’s positions on tax policies, except those that are not in the best interest of the sector. The differences are detailed below.
House vs. Senate Tax Bill Comparison
House Version – Eliminates Student Loan Deduction, Sec. 127 employer-provided education assistance, Sec. 117(d) tuition remission benefits, and the Lifetime Learning Credit.
Senate Version – Maintains student benefits.
Institutions — Private Activity Bonds
House Version – Eliminates Private Activity bonds and advance refunding of bonds
Senate Version – Retains Private Activity bonds. Eliminates advance refunding of bonds.
Institutions — Excise Tax on Endowments
House Version – Adds an excise tax on private college and university endowments with assets of $250,000+ per full-time student.
Senate Version – Adds an excise tax on private college and university endowments with assets of $500,000+ per full-time student.
There are other elements of H.R. 1 that the House and Senate are in complete agreement that could threaten donations to private colleges and universities and other non-profit organizations. For example, both chambers double the standard deduction. This action will put separate deductions for charitable giving out of reach to 95% of taxpayers and by some estimates could reduce donations to eleemosynary organizations by as much as $13 billion.
Congress must correct the adverse unintended consequence on giving caused by increasing the standard deduction by extending a charitable giving incentive to all taxpayers. SCICU encourages Members of Congress to pass the Universal Charitable Giving Act (H.R.3988 / S.2123) which would allow non-itemizers to deduct up to $4,000/individual and $8,000/couple each year.
SCICU has joined other state and national independent higher education interest groups and the colleges and universities that support them in urging our elected officials to preserve important tax benefits to students and their families and to avoid additional taxes on our higher education institutions.
On November 7, as the House began work on H.R. 1, SCICU wrote all nine members of the South Carolina Delegation to make our positions known. SCICU President Mike LeFever met with Reps. Clyburn and Wilson on November 13, and a second letter was sent to Senators Graham and Scott on November 21 as the House bill moved to the Senate Finance Committee. Several SCICU member presidents also contacted Delegation members to express in very personal terms how tax reform legislation will impact their students and institutions.
In one final effort to enlist the SC delegation to influence their colleagues to temper tax increases on students, families, and college and universities, a third letter was sent to Washington on December 6.
Whatever the outcome, private colleges and universities will continue to do everything possible to keep costs down and make a college education accessible and affordable.