Republicans achieved victory for their $1.5 trillion tax cut—also called the Tax Cuts and Jobs Act—as the tax bill was recently signed into law by President Trump. With the tax bill now being enacted legislation, many higher education institutions are evaluating how it might impact them.
In the House’s original version of the tax bill, a provision would have taxed graduate tuition waivers, which are given to graduate students who work as teaching and research assistants in exchange for their tuition being waived. This provision caused a negative response from those in higher education, including Boise State President Bob Kustra. President Kustra—along with all the other presidents of Idaho’s public colleges and universities—signed a letter opposing many provisions within the bill and sent it to Idaho’s representatives and senators in Washington D.C.
“We oppose the following provisions, which would have damaging consequences for Idaho public colleges and universities and the students they serve,” the letter read.
The provisions listed in the letter included the taxing of graduate tuition waivers, which is no longer currently included in the new tax bill.
Mark Cowan teaches undergraduate and graduate courses in taxation at Boise State. He also used to work as a CPA in public accounting and was the tax director for a private company.
“That was a major win for higher education. The taxation of tuition waivers was the most contentious issue in the bill for colleges and universities,” Cowan said. “Graduate students and university administrators across the country mobilized to protest that provision.”
There are still portions of the new tax legislation leaving higher education institutions concerned and unsure. For example, another provision specifically opposed within the Idaho public colleges and universities letter is the increase in standard deductions.
This provision, which is still included in the current legislation, nearly doubles the standard deduction amount to about $12,000 for singles and about $24,000 for married couples. The letter signed by Idaho college and university presidents argued that this would potentially discourage taxpayers from itemizing deductions, which includes charitable deductions.
“The increase would undoubtedly reduce the number of people who itemize charitable deductions and reduce charitable giving to not‐for‐profit entities, such as public colleges and universities,” the letter read.
Cowan also said a part of the current tax legislation that would most clearly impact Boise State deals with athletic donations.
Currently, universities with winning athletic teams—such as Boise State’s football and basketball teams—require those buying season tickets (or sometimes individual tickets) to pay a certain amount of a charitable donation to the association that supports athletics at the school. For Boise State, this would be the Bronco Athletic Association (BAA).
“For example, I have season tickets for football, and I have to pay $75 per seat to join the BAA to have the right to buy season tickets. The per-seat charge is based on the location of the seats,” Cowan said. “The better the seats’ location, the more you have to give to the BAA in order to have the right to purchase the tickets.”
Historically, the federal government allows 80% of this type of charitable donation to be deductible, while the other 20% is not since the donor is also buying the right to purchase tickets. Under the new tax law, which could take effect as soon as January 1, 2018, none of this type of donation is deductible.
This change to the tax code prompted the Bronco Athletic Association to send out an email to its donors urging them to pay their BAA per seat contributions by the end of 2017.
“Under the current proposed federal tax bill that appears close to reaching final approval, the deductibility of these donations for priority seating (i.e. ticket-related giving, known as per seat contributions at Boise State) would no longer be allowed,” the email read. “We want you to be aware of this proposed deduction change as the Tax Bill continues to move forward and as the 2017 tax year comes to an end.”
Some other potential concerns of higher education institutions include indirect effects the legislation could have. According to Cowan, this might include pressure on states to reduce taxes, which would mean less money for higher education. Ultimately, a lot of indirect effects will be up to the states as they determine how to implement parts of the legislation.
“This (legislation) is so complicated that we don’t really know exactly how this is going to affect everything,” Cowan said. “There are a lot of moving parts.”