Congress was poised to pass a tax bill on Wednesday, but don't bother looking through it for a set of much-discussed provisions that could affect higher education positively and negatively: They've been dropped from this version of the legislation.
Lawmakers have been working for more than a year on a "tax reconciliation" measure that would both extend some existing personal and corporate tax breaks (including some important to colleges) and make tax policy, notably by tightening controls on colleges and other tax-exempt organizations. Both the Senate and House of Representatives passed tax bills, and representatives from the two chambers have met in recent weeks to strike a compromise version.
The Tax Increase Prevention and Reconciliation Act of 2005 that emerged this week, however (and which the House passed Wednesday), was a stripped-down measure made up of a relative handful of big-ticket items, focused mostly on extensions of politically popular items like a reduced capital gains tax and exemptions under the federal alternative minimum tax.
The various potential provisions that matter to college officials -- either because they very much want them included or very much don't -- were left out of the compromise legislation that Congress is expected to vote on and pass this week, with the idea, said Matt Hamill, senior vice president for advocacy and issue analysis at the National Association of College and University Business Officers, that "everything else will be moved to a trailer bill" that lawmakers will seek to pass later in the year.
The college-related provisions that could end up in subsequent legislation fall into two categories. The provisions they favor would extend for one or more years (1) taxpayers' ability to deduct from their taxable income as much as $4,000 a year in higher education expenses (up to $2,000 for individuals who earn between $65,000 and $80,000 or married couples who earn between $130,000 and $160,000) and (2) a corporate tax credit for investments in university research and development. College officials also hope the final legislation will include provisions contained in the Senate-passed measure that would stimulate charitable giving, by letting taxpayers who do not itemize their deductions deduct some of their donations, and allow older Americans to withdraw money from individual retirement accounts and contribute it to charity.
The provisions that college groups have sought to have excluded from the tax reconciliation legislation would, among other things, increase penalties for nonprofit board members who approve excessive compensation for their organizations' leaders and impose greater scrutiny and require greater public disclosure of nonprofit groups' informational tax forms.
Whether another tax bill with those and other provisions eventually emerges from Congress this year is highly uncertain, said Hamill, given the volative political climate in an election year.
Read more by
You may also be interested in...
Today’s News from Inside Higher Ed
Inside Higher Ed’s Quick Takes
What Others Are Reading