Take Action: The GOP’s Tax Bill poses a significant threat to US universities, their students & employees.

There is a huge chasm between the funds universities receive from state and federal coffers and what it costs for them to fulfill their education, research and service activities. Students, unless their family is wealthy, depend on grants, tuition waivers, and scholarships from their universities to finish their training. Historically, the federal government has understood this and provided space in the tax code to enable universities to attract donors to fill these funding gaps. This is about to end and with it a terrible domino effect will commence that will profoundly undermine the American economy and its place in the world.

The GOP’s Tax Cuts and Jobs Act (TCJA) certainly cuts taxes for the rich but it will also devastate universities’ finances and students’ abilities to fund their educations. It will particularly harm middle and low-income students who are least able to pay the high cost of tuition. It will undermine US dominance in innovation, reduce its skilled workforce and essentially weaken the economy.

The bill will:

- eliminate the line in the tax code for charitable giving. Removing this incentive to donate will cause philanthropy to wither, dramatically reducing funds for student financial aid, research, capital projects and operations. This will devastate the cutting-edge research that drives innovation and life-saving scientific breakthroughs.

-Section 1204 eliminates deductions for interest on student loans, tuition and related fees. These tax incentives are critically important to enable low and middle-class families to educate their children.

-Section 127 eliminates the ability of employers to provide tax-free tuition assistance to their employees of up to $5,250 which is currently excluded from employees’ taxable income.

-Section 117 eliminates the ability of universities to provide tuition reductions for their research assistants, teaching assistants, and students who support themselves by working at their institutions. These deductions enable hundreds of thousands of students across the United States to afford their education.

-Section 5103 of the bill imposes an excise tax on endowments to private institutions, a vital source of stable funding. Taxing these endowments will reduce philanthropy.

-Section 5001 will not allow income derived from university pension plans to be tax free. This will decrease the assets in those plans and thus reduce employees’ pensions.

-Section 1201 eliminates the Lifetime Learning Credit and the Hope Scholarship credits: a direct financial hit to students.

This bill is, in short, a job killer and a spike into the heart of the economy. It is exactly the opposite of what is needed to create a skilled workforce, drive innovation and be competitive internationally. Furthermore, it will exacerbate the nation’s widening inequality as the families most affected will be the least advantaged

We have a bedrock principle in medicine that guides our actions: do no harm. The GOP should embrace this medical dictum, rewrite the bill and encourage philanthropy, investments in universities, research, education and the nation’s youth.