This is appalling. Not especially surprising, since we’re talking about a group of people who stand to benefit from having the dumbest population possible. I mean, why don’t we just fucking outlaw education?

This won’t hurt a huge majority of Americans, but it will do some rather on-point damage to my family, for instance. One reason my sister took her current job at Wake Forest is so she could send her children there for free one day. I don’t know for sure, but this added tax hit might just deprive my niece and nephew of their only shot at a top 25 education.

I’ll be wanting a copy of how my “representatives” voted on this one.

Congressional proposal would tax tuition benefits
By JEFFREY SELINGO
Chronicle of Higher Education

College employees would be required to pay federal taxes on the tuition benefits they receive and two popular Clinton-era federal tuition-tax credits would be combined into one under recommendations made last week by a Congressional panel that performed a broad review of the federal tax code to find ways to generate revenues.

The recommendations were part of a 430-page report by Congress’s Joint Committee on Taxation. The report contained a slew of proposals that could raise more than $300-billion for the federal government over the next 10 years. Among those of interest to colleges were ideas that would cap the amount students may earn without paying Social Security taxes, at $920 a year, and would sharply reduce the deduction people can take on their individual income taxes for donating land.

Whether the plans will go anywhere is unclear. One of the lawmakers who requested the report, Sen. Charles E. Grassley, a Republican from Iowa and chairman of the Senate Finance Committee, said in a written statement that the proposals would get a “close look” from his panel as “we roll up our sleeves to deal with the deficit and address tax reform.”

Of most concern to colleges is the proposal to tax tuition benefits, which the Joint Committee on Taxation said would raise $1.9-billion over the next decade. College lobbyists in 1997 fought off a similar idea, and its re-emergence in the committee’s report caught some of them by surprise.

“We thought this issue was sort of dead,” said Cynthia A. Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities.

While colleges have tightened tuition benefits in recent years — for instance, many no longer cover tuition at neighboring colleges or the full cost of education — the perk is still considered one of the most attractive reasons to work at a higher-education institution. The benefit is particularly helpful to small colleges that cannot afford large salaries, Ms. Littlefield said, and to low-wage workers.

“It’s a huge help to the secretarial pool in allowing their families to go to college,” Ms. Littlefield said. “If this proposal is put into law, it would be a huge stumbling block in achieving that success.”

But in its report, the Congressional committee said failing to tax the benefit is unfair because it is available to only a “limited group of taxpayers.” Within higher education, the panel noted, the perk “may be available primarily to those working for educational institutions which have the greatest resources and by employees of the most resource-rich schools within such institutions because such institutions and schools may be in the best financial position to provide such benefits.”

Sheldon E. Steinbach, vice president and general counsel at the American Council on Education, said on Friday that he worried the idea may gain momentum in Congress because of the public’s anxiety over college costs. “For some in Congress, it may be hard to justify giving tuition to the children of faculty members tax-free when middle-class families are struggling to pay for college,” he said.

If the proposal becomes law, Mr. Steinbach said, it is likely that faculty members would push colleges to somehow compensate them for what they ended up paying in extra taxes.

The Joint Committee on Taxation also took aim at two tax breaks that were a hallmark of the second Clinton administration, recommending that the Hope and the Lifetime Learning credits be combined with an existing deduction for college expenses. Having one single credit, the committee said, “would promote simplicity in delivering education tax benefits.”

Under the committee’s proposal, the combined credit would pay for 25 percent of the first $10,000 of expenses per student. By contrast, the Hope federal tax credit covers 100 percent of college expenses up to $1,000 and 50 percent of the next $1,000, for a maximum of $1,500; the Lifetime credit pays 20 percent of tuition costs up to $10,000; and the deduction covers $4,000 for higher-education expenses.

The committee rejected a change, proposed by advocates for needy students, that would make the tax credits fully refundable. Most low-income families are unable to receive the credits now because they do not pay enough in taxes.

“Refundable credits,” the committee’s report said, “are administratively complex and potentially more subject to fraudulent claims that are difficult to recoup.”

Changes in the rules governing land donations would help the government raise $2.5-billion over the next nine years — more money than any of the committee’s other proposals.

That revenue would come in part from a change the committee suggests in how much donors can write off on their taxes when making gifts of land. Donors would be required to take a deduction for the basis they have in any property they donate, rather than the fair market value, as they can do now. For example, if an individual gave property to a college worth $500,000, but has paid only $200,000 on the property’s mortgage, the individual could write off only $200,000.