Tufts Opposes Provisions in New Tax Bills

President Anthony P. Monaco lays out the case against changes that harm students, families and higher education
Memorial Steps on the Tufts campus
The proposed changes “would increase the cost to students attending college nationally by more than $65 billion between 2018 and 2027,” Anthony Monaco wrote. Photo: Alonso Nichols
November 22, 2017

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As Congress moves forward with its tax overhaul plan, Tufts President Anthony P. Monaco is voicing concerns about provisions that he says would adversely impact members of our community and diminish the strength of higher education across the country.

In a letter sent on November 22 to all members of the Massachusetts congressional delegation, Monaco said that some of the proposals “would negatively impact our students, employees, and our institution, ultimately making college less affordable, discouraging participation in higher education, and decreasing U.S. competitiveness globally.”

The proposed changes, including taxing tuition waivers for graduate students and tuition reimbursement to employees, as well as eliminating the deduction for student loan interest and other expenses, “would increase the cost to students attending college nationally by more than $65 billion between 2018 and 2027,” Monaco wrote.

The U.S. House of Representatives passed tax reform legislation on November 16, and the U.S. Senate is set to vote on its own tax bill soon. The differences between the two versions would need to be reconciled, passed by both chambers, and signed by President Trump before becoming law.

The House legislation would eliminate tuition-free tax waivers that are widely used by graduate students. “This would have a devastating impact on our graduate teaching and research assistants, as it would increase a student’s income tax by as much as $10,000 per year,” Monaco wrote. Currently, universities such as Tufts grant tuition waivers, which are not taxed for graduate students who teach and conduct research as part of their academic programs. But the House plan would tax those benefits, and “create a new tax and place an overwhelming burden on graduate students,” Monaco wrote.

Likewise, the House plan calls for taxes on education benefits. Employees of universities such as Tufts and their dependents would be taxed for education benefits, which are currently tax-free. According to a survey this year by the College and University Professional Association for Human Resources, 50 percent of employees receiving these types of tuition reductions earned $50,000 or less, and 78 percent earned $75,000 or less, making the aid “a valuable benefit as it enables these families and their dependents access to higher education,” Monaco wrote.

Republican plans also call for an increase in the standard deduction for income taxes, which would greatly reduce the incentive for people to deduct charitable donations. Organizations that rely on charitable gifts fear that, with less of a tax incentive to make charitable gifts, some donors may reduce their philanthropy. Some 30 percent of income tax filers currently itemize charitable giving deductions, and projections suggest that number could drop to around 5 percent, according to the Tax Policy Center. The Joint Committee on Taxation estimates that the number of taxpayers claiming the charitable tax deduction will drop from about 40 million to 9 million under the House plan.

“Charitable donations are an important source of Tufts’ operating revenue, supporting student scholarships, professorships, academic programs, research, and other important initiatives,” Monaco wrote. “The current proposals would negatively impact charitable giving, reducing the financial resources available to provide vital support for students and faculty.”

The House plan also introduces a new tax on certain higher education endowments. Although it would not affect Tufts now, Monaco decried the proposal to levy a 1.4 percent excise tax on endowment investment income for endowments that have a value of more than $250,000 per enrolled student. “Taxing endowments would adversely impact the financial resources available from the endowment, reducing support for important programs and scholarships,” he wrote. “This proposal establishes a precedent that would be very detrimental to higher education, and which may one day impact Tufts University.”

The House and Senate bills also propose the elimination of private activity bonds, which are used by colleges and universities to finance capital projects. These tax-exempt bonds, similar to municipal bonds, lower the cost of borrowing money for nonprofit institutions such as Tufts. The university “has used private activity bonds for critical investments such as maintaining and repairing medical, engineering, and dental research laboratories; supporting deferred maintenance projects; and investing in technology to create more efficient academic and learning environments,” Monaco wrote.

While the university supports tax reform goals of aiding the middle class and spurring economic development, Monaco wrote, “these proposed provisions run counter to those goals by making higher education more expensive for working and middle-class students and families and harming our nation’s research enterprise that fuels innovation. If the U.S. wants to remain the global leader of high-tech talent and continue to enhance our economic well-being, our tax policies should encourage the pursuit of postsecondary education and support our basic research enterprise.”

The university also plans to work with the American Council on Education and National Association of Independent Colleges and Universities to lobby members of Congress on the bills.

Taylor McNeil can be reached at taylor.mcneil@tufts.edu.