November 29, 2017

UMass: Tax bill would hurt universities

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UMass Medical School and other UMass universities could be financially harmed by a U.S. Senate tax bill.

If the tax code overhaul expected for a vote in the U.S. Senate this week passes, it would threaten the financial stability of universities, stifle research, and financially harm graduate students and young alumni, the University of Massachusetts system said Tuesday.

UMass President Martin Meehan and the heads of each of UMass's five campuses on Tuesday sent a letter to the state's congressional delegation registering concerns with the U.S. House-passed tax bill and similar legislation that has cleared the U.S. Senate Finance Committee.

"The University of Massachusetts believes that both current versions of the tax reform legislation would have serious adverse impacts on the university, our students and our employees," Meehan and the chancellors wrote. The tax reform package, they wrote, "threatens the financial stability of universities and specifically and unfairly targets college students, particularly graduate students."

Republicans in Washington are trying to pass what would be the most thorough overhaul of the American tax code since the Ronald Reagan years. A version of the legislation passed the U.S. House 227-205 and Gov. Charlie Baker and the all-Democrat Bay State congressional delegation have been critical of the plan.

UMass flagged as serious concerns the elimination of the Lifetime Learning Credit and the Hope Scholarship Tax Credit, and the repeal of a tax exemption for tuition waivers granted to graduate students.

"Approximately 5,000 graduate students at UMass face the prospect of their tax burden significantly increasing -- in some cases by more than 100 percent -- which could stifle research and scholarship and have a negative effect on critical workforce development in the Commonwealth," the UMass letter says.

The GOP tax plan that passed the U.S. House with 15 Republicans joining the Democrat caucus in opposition, includes a permanent cut to the corporate tax rate from 35 percent to 20 percent, makes no changes to the individual mandate to purchase health insurance and makes no major changes to 401(k) retirement plans. The Senate bill, however, seeks to eliminate the individual mandate to purchase health insurance.

UMass also cited as troublesome the elimination of the Student Loan Interest Deduction -- which the UMass system said benefits more than 10 million American taxpayers annually -- the repeal of the income deduction for personal exemptions for college-aged dependents, and a provision in the Senate bill that would impose a tax on income derived from licensing a university's name or logo.

UMass echoed Baker in its letter, raising concerns about limiting state and local tax deductions to $10,000 and restricting those deductions to property taxes, and imposing a $500,000 cap on mortgage deductions.

"Frankly, in many communities the average price of a house is $500,000, in many cases more," Baker said in a TV interview earlier this month.

Aides to U.S. Sens. Elizabeth Warren and Edward Markey said they expect Republican leaders to bring the tax overhaul bill to the Senate floor this week. Republicans hold a slim majority in the Senate, where they can afford to lose only two members, assuming Democrats hold ranks in opposition to the legislation.

In writing to the 11 Democrats who comprise the Massachusetts delegation, the UMass officials acknowledged that the entire delegation is already opposed to the tax overhaul and that the legislation was written in a "uniquely partisan" manner.

"We hope that bringing these specific provisions to your attention might inform some of your efforts to work toward a more sensible tax policy," they wrote.

The Wall Street Journal reported Tuesday that Senate Majority Leader Mitch McConnell could bring the tax overhaul to the Senate floor for a vote "starting Thursday."

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