After a vote largely along party lines, the United States House of Representatives passed a $1.5 trillion Trump administration-endorsed tax bill which would slash taxes in the short term, if ultimately passed.
“Princeton is deeply concerned about the damaging effects of the House-passed tax legislation on students and institutions of higher education,” wrote Joyce Rechtschaffen, a University spokeswoman, in a statement to the ‘Prince.’ “At a time when the government should be encouraging students of all backgrounds to pursue higher education, this bill imposes new financial hurdles through changes in the tax code. Instead of encouraging innovation that drives our economy and supports national security and health, this bill would have serious consequences for the ground-breaking research that results in new technologies and life-saving medicines,” she wrote.
The House tax bill contains several provisions to which colleges and universities object, including the removal of tax deductions for student loan interest. The bill would make graduate student teaching and research income taxable, and would tax endowments of private universities with at least 500 students and where the value of the school’s endowment is more than $250,000 per student, an elite group which includes the University.
The Senate version of the bill also includes a proposed tax on the royalties college and universities earn from use of their name and logo, eliminating them from universities’ general tax-exempt status.
The House’s passage of the “Tax Cuts and Jobs Act” marks President Donald Trump’s most significant legislative victory to date, but before it becomes law, it must pass through a wary Senate. The Senate Finance Committee will likely vote on the Senate’s version of the TCJA Friday before it is referred to a vote by the entire Senate body. However, the Senate bill, unlike the House’s version, maintains the student loan interest deduction.
“Princeton has joined with universities through the country in strongly opposing a proposal in the bill that would eliminate a provision in current law that excludes certain forms of tuition waivers and reductions relating to research and teaching assistantships from taxable income for graduate students,” Rechtschaffen wrote. “We are gratified that the Senate proposal does not include this proposal.”
New Congressional analysis demonstrates that, while taxes would drop in the short run, by 2021 taxes would rise for families making less than $30,000 a year and by 2027 taxes would rise for those making less than $75,000 annually after the bill’s cuts expire in 2025.
In addition to unilateral Democratic opposition, 13 Republican representatives — from New York, California, New Jersey, and North Carolina — voted against the bill. The former three states, along with Illinois, maintain the highest state taxes in the U.S. The bill which passed in the House today removes deductions for state and local taxes from the tax code, a provision which would disproportionately disadvantage residents of traditionally Democratic states.
This is a breaking story, and will be updated as more information becomes available.
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