Statement Regarding the Reconciled Tax Bill Submitted to Congress
December 18, 2017
To the University community:
Friday evening, Congress released the details of its reconciled tax reform bill. Many of the initial proposals that could have increased the costs of a college education and reduced access to higher education have been removed. It appears that the more favorable Senate provisions have prevailed. But there are still aspects that are of concern.
The bill eliminates the ability of private non-profit colleges and universities to do advanced refunding with tax-exempt bonds. This financial technique is used by universities to consolidate debt and keep educational costs down. The bill also imposes a 1.4 percent excise tax on private non-profit universities with endowments of $500,000 or more per student. While this does not affect Webster University, we believe it sets a precedent for taxing non-profit institutions in ways that contradict the purposes for which endowments like Webster’s exist—to honor donors’ philanthropic intentions for the university and generate scholarship dollars that go directly to our students.
Most concerning is that the bill is structured in a way that could significantly reduce tax-based incentives for many donors to make contributions to non-profit organizations like Webster University. Some economists believe the percentage of U.S. citizens who donate could fall from 15 percent to less than five percent annually under this bill. This could significantly reduce Webster’s and other universities' ability to generate resources to fund scholarship and grant programs for the neediest students.
The final bill will go to the House and Senate this week with no opportunity to add amendments. The bill is expected to pass and the president is expected to sign it into law by Friday. We will continue to work with educational organizations in expressing our concerns to our elected officials right up to the final vote. Given the enormous changes made across the board in this bill, there are likely to be technical and non-technical corrections in additional tax legislation next year, and we will see those as opportunities to continue to advocate for further changes that will expand access to higher education, not reduce it.
We also will continue to track the development of the PROSPER Act, the reauthorization of the Higher Education Act. Initial drafts of that bill have troubling proposals in them that would directly impact college resources for current students and their families. That bill is not expected to be debated until after the holiday break.
At the same time, we are monitoring any movement on legislative resolutions for Dreamers and regulations that affect universities’ handling of sexual misconduct.
If you seek an opportunity to let your elected representative know your opinions regarding matters that impact higher education and those we serve, you can find their contact information at https://www.usa.gov/elected-officials.
Elizabeth (Beth) J. Stroble
Julian Z. Schuster
Provost, Senior Vice President and Chief Operating Officer