Tax reform legislation proposed by Republicans in the U.S. House of Representatives would boost large chemical companies and other U.S.-based multinationals. But research universities, teaching assistants, and those with student loans would lose key benefits under the plan to enact the first major overhaul of the U.S. tax system in more than 30 years.
The introduction of the bill (H.R. 1) on Nov. 2 is an “important step toward modernizing our nation’s tax code,” says the American Chemistry Council, the chemical industry’s largest U.S. lobbying group.
The GOP blueprint includes numerous provisions sought by manufacturers, such as a sharp cut in the current corporate tax rate of 35%, one of the highest in the world, to 20%. The change is designed to make taxes on U.S.-based multinationals more competitive in global markets.
In addition, companies with worldwide operations would have a one-time opportunity to bring home trillions of dollars in foreign income currently sheltered in overseas subsidiaries at reduced tax rates.
Higher education groups, meanwhile, say several provisions in the bill, such as a new tax on wealthy college endowments, will harm students and their families.
To raise revenue to help fund the tax cuts, private colleges and universities would face a 1.4% excise tax on investment earnings from their endowments. The proposal would affect schools with assets of more than $100,000 per student and would raise an estimated $3 billion over a decade.
“Endowments support substantial student aid and student service programs, and provide funding for instruction, research, and for building and maintaining classrooms, labs, libraries, and other facilities,” says Mary Sue Coleman, president of the Association of American Universities, which represents 62 institutions.
The bill would also eliminate the interest deduction on student loans, which affects about a third of Americans with student debt. And it would tax the tuition waivers that graduate students often receive when they work as teaching assistants or researchers.
Supporters hope to send a final bill to President Donald J. Trump by the end of the year. The Senate is expected to follow up with its own proposal in the coming weeks.