Impact of Proposed Tax Reform Bill
Dear Wellesley Community,
I am writing to bring to your attention a bill that the U.S. House of Representatives introduced at the end of last week. The bill would have a significant impact on colleges and universities, including Wellesley. Called The Tax Cuts and Jobs Act, it includes provisions that would impede our ability to fulfill Wellesley’s mission to provide an outstanding education for our students, regardless of their financial background.
The Senate released its tax plan yesterday evening, which is reported to include a tax on endowment. Given Congress’ swift action, and understanding that many of the current provisions will change as the House and Senate seek compromises, we wanted you to know what is at stake:
- An annual 1.4 percent excise tax on endowment income: Although it is too early to put a specific number on the impact that this tax would have on Wellesley, initial estimates suggest it would be millions of dollars—perhaps tens of millions of dollars—over the next decade.
- An end to access to the market for tax-free bonds: Access to tax-exempt debt is how many not-for-profit institutions like Wellesley are able to make critical investments in our buildings and facilities.
- A repeal of the student loan interest deduction, used by many who are paying off student loans.
- An end to various tuition credits for students.
- An end for most taxpayers to itemized deductions, which, along with a proposed repeal of the estate tax, will have a serious negative effect on philanthropy for all not-for-profit organizations.
- The elimination of tax-free employer tuition reimbursement.
Congress’ tax bill as proposed would take a damaging toll on Wellesley’s ability to sustain the financial aid policy that enables the College to enroll a socioeconomically diverse student body—and maintain one of the lowest net prices among the country’s leading liberal arts colleges.
As you take the time to understand the implications of these provisions, you may wish to consider reaching out to your federal elected officials to voice your concerns. We remain steadfast in our focus to communicate the value of a Wellesley education to our elected officials and to the greater public.
We will do everything we can to sustain our commitment to our mission, and to ensure that some of the nation’s brightest young women—irrespective of their families’ financial resources—have the opportunity to fulfill their potential and make their difference in the world, as Wellesley women have done with excellence for almost 150 years.
Paula A. Johnson