Editorial: Taxing the future of America

Sunday, November 26, 2017

New Hampshire residents are among the nation’s most highly educated. More than one-third of the state’s 1.3 million people have at least a bachelor’s degree. The state is also in the education business with 28 colleges and universities. Higher education has helped New Hampshire, and the nation as a whole, prosper. But it is under attack.

The tax plans Republicans are proposing would put higher education out of reach for some aspiring students. They would make graduate-level education unachievable for the very people whose skills are the key to competing in a global economy, those in the so-called STEM fields – science, technology, engineering and math.

How does that make sense?

The proposals, most contained in the budget put forth by the House, are ostensibly being made to help offset losses to the Treasury from tax cuts that would primarily benefit corporations and the well-off.

Is it a coincidence, however, that the cuts would hit the blue states that are home to the majority of the nation’s colleges hardest? Maybe, but we doubt it.

Not all of the proposals will become law and if the tax plan doesn’t pass, perhaps none of them will. But they have students, their families and colleges more than a little worried. Anyone concerned with the future of the economy should be worried as well.

One of the worst ideas in the Republican plan calls for taxing the value of the tuition forgiven when a graduate student works as a teaching assistant while pursuing a higher degree. Teaching assistants are notoriously poorly paid, with most earning $20,000 to $30,000 per year. In exchange for their labor at low pay, universities waive tuition costs worth tens of thousands of dollars. The House plan would treat the waived tuition, which can top $50,000, as taxable income. If the waiver put the student in the 25 percent tax bracket, he or she could have to pay $10,000 or $15,000 in taxes on a cash income of say $25,000 and somehow still survive. The effect on students and higher education would be devastating.

An almost equally bad proposal would eliminate the student loan forgiveness program that over a period of years eliminates the debt of graduates who take public service jobs, say as police officers, teachers or Peace Corps volunteers. Scrapping the program would make it that much harder to draw top candidates to careers in public service.

Yet another change would add to the bills of students and parents by eliminating the tax write-off for the interest paid on student debt. Some 23 million Americans are repaying more than $2 trillion in student loans and 12 million of them took the student loan interest deduction in 2015. That one would hit New Hampshire graduates, who leave college with the highest average debt in the nation, particularly hard.

Also on the table is a plan to levy a 1.4 percent tax on the income universities earn on endowments worth more than $100,000 per student. While the tax would hit only 150 or so institutions they are among the oldest and most prestigious, and also major dispensers of financial aid.

The tax exempt municipal bonds that universities use to finance construction projects are also on the block as are limits to itemized tax deductions. The latter, universities fear, could reduce the kind of charitable giving that supports student aid and fills endowments.

Perhaps pulling the ivory towers down is the impetus for the Republican tax proposals but if they fall, so will America’s place in the world and, ultimately, its standard of living.