Consequences for the St. Joe’s community
The United States Senate passed a version of a new tax plan early on Dec. 2, after the House of Representatives passed its own version a few weeks earlier on Nov. 16.
St. Joe’s president Mark C. Reed, Ed.D., sent an email to the university about the implications of the tax bills should they become law. The bills must now go to conference in order to reconcile the differences between the versions passed by each chamber, and Congress must then pass a final version to send to President Donald Trump for his signature. With the most significant hurdles behind it, the final version of the bill will be expected to become law.
Changes in the federal tax structure affect almost everyone. If you work, either full-time or part-time, or have any loans out, the tax bill decides what you’re responsible for in taxes and what you can file as a deduction. Chances are, the outcome of this bill will affect each of us as students, faculty and staff of a university, so it’s our responsibility to be aware of the possible implications of such an important bill.
As a staff, we appreciate Reed bringing these bills to the attention of the whole campus community. We believe it’s important to highlight these provisions of the tax bills and understand how they would affect universities and those associated with them.
The current plans passed by the House and Senate would repeal the student loan interest deduction and would repeal or make significant cuts to tax exemptions for construction, improvement or infrastructure projects undertaken by colleges or universities. Furthermore, the new plan would tax faculty and staff tuition benefits for themselves, spouses or dependent children and graduate student tuition waivers as income.
Here’s what each of these changes means for us as members of a university community.
1) The House bill repeals the Lifetime Learning Credit, which allows some students with outstanding loans to deduct up to $2,000 from their tax bill. Claiming this deduction saves qualifying taxpayers about $2.6 billion each year.
Additionally, the House bill repeals deductions that allow individuals with incomes below $80,000 and couples who file jointly with incomes below $160,000 to deduct up to $2,500 of the interest paid on federal student loans. In 2015, 12.4 million people claimed this tax break, but this will no longer be an option for qualifying taxpayers if the final version of the bill eliminates this deduction.
2) The House plan would eliminate tax breaks on the bond financing often used by universities to finance construction projects, which will ultimately make campus improvements more expensive. Bonds of this type totalling $402 billion were issued in 2016.
3) Some benefits that faculty and staff members receive include waived or reduced tuition for themselves and their dependents. Currently, education assistance up to $5,250 is not taxed. This is a crucial benefit for many employees, but under the House bill, the full value of these benefits will be considered taxable income.
4) St. Joe’s is one of many schools that waive or reduce tuition for some graduate students in exchange for working at the university. Under the House plan, these waivers or reductions will qualify as taxable income. Even though these students do not receive real income in compensation for their work, they will now be expected to pay the government taxes for the value of tuition waivers or deductions. Currently, about 145,000 students receive this kind of compensation, so they would now be expected to pay taxes on their tuition. This will only add to many students’ already heavy financial burden and will make attending graduate or doctoral programs increasingly difficult for those students.
Whether or not we agree with these changes, the fact of the matter is that they will impact each of us in some way. Students might feel the effects directly when they have to pay taxes on graduate student tuition assistance or cannot deduct student loan payments. Faculty and staff members who use tuition assistance to put themselves or their families through college will have to pay taxes on the full value of that assistance as though it were real income. Each and every single one of us will be indirectly impacted if the university has to increase tuition or forgo improvement construction projects if we can’t afford them without bond financing.
The changes proposed in the House plan will have an undeniable effect on our lives, especially as students and as members of a university community. Therefore, each of us ought to get invested in the outcome of this tax plan.
The simultaneous joy and burden of democracy is that it’s up to us to hold our representatives accountable. Government representatives should be transparent and open to the thoughts of their constituents. The slow-going legislative process is the object of much dissatisfaction in our country, but the process necessary to conference and pass a final bill gives us time to voice our concerns to our representatives in Congress.
We can’t just sit silently as major policy decisions are made on our behalf. We need to ask our representatives to take our opinions into consideration. Take time this week to contact your representatives and raise your voice to express support of or concern about these proposals.
– The Hawk Staff