Posted on 11/13/2017 5:18:13 AM PST by Kaslin
Consider two food service workers who have been working at a local university for the past three decades. Neither has a high school diploma; each was born and raised a few miles from campus. They have three children currently enrolled in the university's science and mathematics programs. One is hoping to be a doctor, another a physicist and child number three a high school mathematics teacher. Literally, the American dream.
One of the reasons they have remained employees at the university for twenty years is that universities have been able to provide qualified tax-free tuition reductions for their employees. This law has been in the Internal Revenue Code for many, many decades and has historic precedent that in some ways goes back centuries. The couple's gross income is $70,000. Under the House's tax reform package, their taxable income for 2018 will now include the previously free tuition of $120,000. No longer will the tuition be tax free. There is no grandfathering, no transition, nothing to protect the three college students or their parents. And certainly, as the bill is proposed to be effective January 1, 2018, there is no time for their children to search out new scholarships. Obviously, the parents will not be able to pay the income tax that would result from the proposed tax reform. Essentially, their children will need to drop out of college and pursue scholarships beginning in September, 2018. This cannot be what the House of Representatives has in mind.
For decades, the federal government has encouraged students to attend universities and borrow funds for their education. The House bill eliminates the deduction of student loan interest beginning in 2018. If a federal prosecutor were pursuing a public corporation for changing a similar policy, that prosecutor would be looking for significant punitive damages.
It goes on. Graduate students in the House proposal will lose tax credits and employees studying for advanced degrees will be required to report as taxable income the tuition being paid by their employers.
Should any or all of these tax opportunities be eliminated from the Internal Revenue Code? Let's be clear here: a cogent argument could and can be made to eliminate these "tax loopholes". A cogent argument can also be made that each of these tax provisions encourages higher education and that we should use the Internal Revenue Code to incentivize behavior. These two positions are irrelevant to this discussion. The issue is whether taxpayers who are and have been relying on these tax rules should have their worlds turned upside down through the sudden and immediate elimination of laws that allowed them to begin their college education or continue their advanced degrees. Another issue and it holds huge political ramifications is whether the literally tens of millions of Americans who are paying their college loan debt payments should lose their interest deduction overnight.
The traditional southern saying: "Dance with the one that brung you" has a long history in the Internal Revenue Code. For the most part, there have always been transition and grandfathering where taxpayers have relied on existing tax law. Honest people can debate these educational rules with resulting different conclusions. What is difficult to understand is why the House of Representatives did not propose grandfathering and transition rules.
On a smaller stage, although one only likely very important to significant political contributors, is the change in the deductibility of the "premium" (bribe) paid by wealthy purchasers of collegiate sports tickets to their universities to insure they receive the best tickets. This "premium" has been eighty percent deductible for many decades. It is intellectually indefensible, but many universities have been relying on these amounts to fund their athletic programs and the universities have long term contracts with third parties that are, in part, reliant upon a continuation of these rules. The University of Southern California is relying on these funds to rebuild the Los Angeles Coliseum for both their football program and the Olympics in 2028.
There is much to love in the proposed tax bills. But, and it is a huge but, in the Joint Committees between the House and the Senate, there needs to be an understanding that there are situations that require grandfathering and transitions. Taxpayers should be allowed to rely on a tax code that cannot change literally overnight and undo planning that has been encouraged for decades. There are easy and appropriate fixes.
This tax scheme targets those deductions that primarily aid middle class taxpayers. When over the course of 2018 all these hundreds of thousands of taxpayers realize that they have been screwed then does the GOP really think they won’t want to take it out on their congressmen and senators?
This tax scheme targets those deductions that primarily aid middle class taxpayers. When over the course of 2018 all these hundreds of thousands of taxpayers realize that they have been screwed then does the GOP really think they won’t want to take it out on their congressmen and senators?
These are “poison pill” provisions designed to ensure that nothing gets passed. Pretty simple.
The GOPe fails to reform medical costs then eliminates the medical cost deduction. Time to get rid of the GOPe
Since the federal government moved into higher education, tuition and fees have soared. Go back to charging what was prevalent in the ‘60s and many more students could afford a degree. As someone who graduated in four years while working my way through college, I know that it used to be done that way for millions of Middle Class students.
What President Trump Asked For vs. What Congress Built
So because many people have not been paying their fair share because of tax loopholes, the GOP is the bad guy for trying to end this. I admit I will likely pay more in taxes under this plan, since I itemize, but it is more than worth it to finally see the beginning of the end of the use of the tax code as a political tool to buy votes.
Most people don't understand the distorting effect of our tax code.
It is why health care and education, at all levels, is so d@mn expensive.
Don't get me going on the cost of government, particularly the judiciary (lawyers).
They're not ending it. They're expanding the number of people who won't pay taxes at the expense of a lot of people who already do.
I admit I will likely pay more in taxes under this plan, since I itemize, but it is more than worth it to finally see the beginning of the end of the use of the tax code as a political tool to buy votes.
I guess I don't share your altruism when it comes to paying taxes. I think I already pay more than enough and don't like the fact that I will pay a lot more if this passes.
Government is forever.
A recent photo of the “Three stooges”. Would you trust anyone of those crooks? And to think there are several hundred of them in the senate and congress.
“So because many people have not been paying their fair share...
I’m pretty sure liberal beliefs and thinking are prohibited on FR...
It ALL begins with a false demand and a false analysis.
The false demand is that any “tax reform” must be “revenue neutral”, that spending “as is” is sacrosanct. The false analysis is the acceptance of Congressional budget scoring-analysis of tax changes as “always right and never wrong”, when it has usually been always wrong and never right. Any large tax reduction on any demographic or GDP sector is likely to be an economic boost and wind up generating more revenue than Congressional analysts predict.
But with those two errors in hand the RINOs in charge go looking for winners and losers they would exchange in the tax code in order to keep the changes “revenue neutral”. They start with the winners they want to create, often rightly so, and then go looking for whose ox to gore to keep everything “revenue neutral”.
I can understand all that and appreciate some it. But I do believe they are wrong in their education deduction targets. Yes, I realize the biggest beneficiary is the education industrial complex that has not performed a single cost reduction measure on itself in over four decades, outstripping every other economic sector in the inflation of what it’s charging. All the “assistance to students” has had the affect of removing customer-market forces to induce the educational industrial complex to restrain its costs and lower what it is charging. No need; the politicians will pretend to rescue the students when they are really rescuing the educational industrial complex.
All true.
However, with the mess of the that financial and economic dependency created and in place for so long, IT WILL BE CUTTING OF THE STUDENTS COLD TURKEY and with the entire education industrial complex “supporting the students” they will be no time in the next year to convince anyone that the real target of the tax deductions is the extravagant education industrial complex, and trying to empower market forces (customers) to get education costs lowered.
In as much as the RINO biggest failure is communication, of course they have not laid out any economic or philosophical rationale for the removal of the tax deductions for education. Because although there are good philosophical reasons for them, they were not the reasons behind the RINOs choice. They merely did the math, looking for sums of deductions that would collectively add up to the tax reductions they want to make - to keep everything revenue neutral.
There are good reasons for the business tax reductions they want to give. But as long as they stick to the demand for “revenue neutral” they will only produce another tax mess, of either raising very much the tax rates on “high earners” or cutting off abruptly many tax deductions the Middle Class has become dependent on. Frankly, to keep hold in D.C. a year from now, they will have to take the former course (taxing high earners) or totally lose the “blue collar” vote that kept the GOP majorities in Congress and elected Trump.
Under this round of “tax reform”, the Chamber of Commerce will get their tax breaks, and they will be paid for by Main Street.
They’re not ending it. They’re expanding the number of people who won’t pay taxes at the expense of a lot of people who already do.
You get it.
Tax SUBSIDY of $120,000
Not a Deduction
College is expensive because students paid for these privileged loafers, whose royalty gimmick was they were part of the wasteful system.
Burn Them Down. Hooray GOP here.
The best ever summation about the tax cut/tax reform debate. Establishment hatred of the President is that strong.
Will Athletes getting free tuition & other benefits also have to declare it as income???
One of the reasons they have remained employees at the university for twenty years is that universities have been able to provide qualified tax-free tuition reductions for their employees. This law has been in the Internal Revenue Code for many, many decades and has historic precedent that in some ways goes back centuries. The couple's gross income is $70,000. Under the House's tax reform package, their taxable income for 2018 will now include the previously free tuition of $120,000. No longer will the tuition be tax free.Gosh, it's almost as if the Pubbie RINO leadership *doesn't care* and has created a ridiculous proposal that is intended to torpedo the entire party at the ballot box in 2018! Oh, and it's also clear that going to college costs too much. Thanks Kaslin.
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