The Recent Congressional Tax Proposals

Date: November 15, 2017
To: The NYU Community
From: President Andrew Hamilton

Last week, the Republican House leadership released a proposed overhaul of our tax system, the most sweeping decades.  The U.S. Senate has subsequently released a separate tax proposal, which is generally less damaging from a student and institutional perspective. I want to brief you on the potential impacts, and on the process.

Background and Impact

Major provisions of the tax proposal, such as lowering the corporate tax rate or eliminating the estate tax, would mean a significant reduction in tax revenue for the federal government.  To pay for the revenue loss from these provisions, the proposal contains changes to existing provisions of the tax code, including a number that are very important to institutions of higher education and would have a serious negative effect on universities, including NYU.
The impacts would be felt across several areas critical to us and other universities, including access and affordability (proposed changes would make it more expensive to send one’s child to college), charitable giving (the proposals may reduce donations), university endowments (establishing a tax on income used to support scholarships, faculty, and research), and potential new tax liabilities (applied to certain employee benefits).
In sum, Congress has unfortunately – and, in my opinion, unwisely -- turned to a series of revenue raisers that hit the higher education sector particularly severely. These provisions, if enacted as currently written, would have a devastating impact on students, employees, and institutions themselves in carrying out their educational and research missions.  In addition, the proposed elimination of state and local tax deductions would fall especially heavily on NYU employees, as well as the families of students from high-tax states.  The shortfalls created by such provisions cannot be made up by universities themselves, with the consequence that just at the moment when more innovation and a more educated population is needed to compete globally, universities shall have fewer resources and be less affordable and less accessible. 


The Process from Here
 
Both the House and Senate proposed tax reform measures have a long and contentious road ahead of them before they can become law, so the outcome is far from certain.  Because the proposals eliminate many tax deductions popular with middle class families, grass roots interest groups -- as well as business groups -- are now joining the higher education sector in vigorously opposing the proposals, which would leave universities open to fewer young people and less able to conduct the cutting-edge research on which our nation relies.  And, it is likely that there will be many changes to the proposals as the congressional leadership seeks enough votes for passage in both the U.S. House and U.S. Senate. 
 
How to Help Shape the Outcome

Be assured that I, along with the deans and the entire senior leadership team, will be aggressive in our efforts to make our case against these provisions in the days ahead as Congress debates this legislation. In anticipation of a tax bill, I have already made several trips to Washington, DC –including one late last month-- to speak to Members of Congress about how the current tax code benefits students, faculty and academic research, and how tax code changes of the kind in last week’s proposal threaten the future of American higher education.  I will continue pressing our case, and will also work hand in-hand with the higher education associations to amplify our message and reach.
 
You, the members of the NYU Community, can also help by contacting your Senators and Member of Congress directly to express concern about the impact this legislation would have on higher education. Click here to view a letter (PDF) from the American Council on Education to Congress that summarizes the main issues confronting higher education in the House tax proposal. In addition, the American Council on Education has set up an Advocacy web page to send a message to your Member of Congress (look in the upper left corner of the page) urging him or her to vote for a tax code that supports affordable and accessible higher education and supports faculty and scientists who create technologies and medical cures that drive our economy.  If you have any questions or need further assistance, please reach out to NYU’s Office of Government Affairs at government.affairs@nyu.edu or at 202-654-8329.