Paul L. Caron
Dean


Monday, December 18, 2017

The Impact Of The GOP Tax Bill On Higher Education: Taxes On Large Endowments, $1 Million Compensation Are In; Taxes On Tuition Remission And Logo Licensing, Private Activity Bond Restrictions Are Out

Chronicle of Higher Education, Final Tax Bill Would Spare Some Higher-Ed Worries, but Could Lead to State Budget Cuts:

The Republican-backed tax overhaul is headed for final floor votes in Congress without some of the measures that would directly target higher education. Notably, a proposed tax on tuition waivers for graduate students and other college employees is no longer in the compromise legislation. But a high-profile tax on the investment earnings of some of the largest college endowments stayed in the bill. ...

A proposed tax on the endowment earnings of the wealthiest colleges remained in the bill. The legislation would place a 1.4-percent tax on the investment earnings of endowments at colleges with more than 500 students and $500,000 in endowment per student. The provision is expected to affect fewer than 30 colleges nationwide, though the number could certainly grow. ...

[T]he bill would impose a 21-percent tax on annual compensation in excess of $1 million paid to any of a nonprofit organization’s five highest-paid employees. ...

The final legislation would eliminate the 80-percent tax deduction that sports fans get to take for “seat-license fees” paid to buy tickets to sporting events — a major revenue stream to big-time college-sports programs. Another provision would prohibit colleges from using a loss in one unrelated business to offset a gain in a different such business, potentially increasing their overall tax burden. Unrelated businesses are those not directly connected to their academic mission, such as recreation or fitness centers, sports camps, facility rentals, and golf courses. ...

A provision to tax tuition waivers as income was scuttled after widespread protests by graduate students. The bill also would not remove the $2,500 deduction for interest paid on student loans.

And special bonds, called Private Activity Bonds, would still be available to nonprofit organizations such as private colleges and alumni foundations. An earlier version of the tax bill would have eliminated those bonds, which are often used for building projects.

A proposed tax on the royalties from licensing a college’s logo — for athletic clothing, for example — was also eliminated from the compromise bill.

https://taxprof.typepad.com/taxprof_blog/2017/12/the-impact-of-the-gop-tax-bill-on-higher-education-taxes-on-large-endowments-1-million-compensation-.html

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Comments

It's interesting how so many of the so-called unfair provisions in this tax bill are actually reductions of benefits to privileged taxpayers

Posted by: mike livingston | Dec 18, 2017 3:05:33 PM

Final bill specified 500 "tuition paying" students which will hopefully remove Berea College from the tax.

Posted by: CareforNOLA | Dec 22, 2017 11:16:21 AM