Will the Tax Reform bill backfire on student debt?
Could be, if many of the clauses pertaining to tax on colleges and universities stick
FULL SENATE TEXT H.R.1- 115th Congress (2017-2018)
Macroeconomic Analysis of the "Tax Cut And Jobs Act" as ordered reported by The Senate Committee On Finance On November 16, 2107- The Joint Committee on Taxation
Howard Gleckman- a senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute
Statement from University of Maryland President Wallace D. Loh
Statement from Georgetown University President John J. DeGioia
"An open letter to Congress signed by 137 economists supporting GOP tax reform bill"
"Tax Reform and Higher Education"- American Council on Education
"The Class of 2017"- Economic Policy Institute
"Passage of Senate Tax-Reform Bill Leaves Colleges Scrambling"- The Chronicle of Higher Education
Freedom of speech, the press and religion, the right to assemble and the right to petition.
While the United States embodies freedom--it's spent a little too much of that 'free' dough-- managing to accrue an outstanding debt of $20.5 trillion, according to the Congressional Budget Office.
In November the nonpartisan Congressional office said unless the debt ceiling--the cap on Treasury spending-- is pushed yet higher, the Treasury would have to take "extraordinary measures" and could still run out of money by April 2018.
Trump's presidency is confronted by this national debt crisis, and his remedy is bolstering the economy by giving tax breaks to corporations.
Economists on the TAX CUTS and JOBS ACT:
“The enactment of a comprehensive overhaul - complete with a lower corporate tax rate - will IGNITE our ECONOMY with levels of GROWTH not SEEN IN GENERATIONS...” pic.twitter.com/2vCBDtLh3C— Donald J. Trump (@realDonaldTrump) December 1, 2017
Sixty-nine percent of democrats and those who "lean democrat" said they believed large businesses and corporations should be taxed higher--not be getting tax breaks, according to Pew Research Center. Thirty-two percent of Republicans said the same.
While the tax reform favors business titans, it poses hardships for college students on scholarship.
The first hardship is that private endowments--charitable donations given to the school that are reinvested--will now be taxed--siphoning money from students and schools to the government.
Another novelty--students given a tuition waver will now have to claim that as "income," and pay taxes on however much they would have paid for tuition.
The Economic Policy Institute says that the average college grad will make between $30,000-$40,000 in their first job. Graduates are given a 6 months grace period before having to pay off college debt.
According to the current tax model, graduates can get up to a $2,500 deductible for paying off interest from their loans. That's about to change if pieces of the House bill carry over in the conference committee.
Two University Presidents denounced the tax plan, arguing it would place an undue burden on students.
"We have expressed our objections to members of Congress and are working with other institutions of higher education, including the American Council on Education (ACE), to continue to communicate our concerns across Capitol Hill," John DeGioia, president of Georgetown University wrote November 21.
"The reduced incentives for charitable donations could lead to a drop in philanthropic giving, which would then result in fewer institutional scholarships and increase financial pressures on students and their families," Wallace Loh, president of University of Maryland wrote November 30. "I urge you to connect with your elected representatives to express your views on the proposed Federal tax overhaul."
Some educators came out in support of the bill and signed an open letter to Congress urging them 'that a competitive corporate rate is the key to an economic engine.'