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Tax Legislation Could Have Less Impact at BC Than Initially Feared

On Dec. 22, President Donald Trump signed into law H.R 1, the Tax Cuts and Jobs Bill Act, the first sweeping overhaul of the nation’s tax code since 1986. Leading up to the passage of the bill, some members of the Boston College community feared its potential repercussions.

On Dec. 8, University President Rev. William P. Leahy, S.J., issued a letter addressed to the Boston College community condemning the proposed tax legislation under consideration by the Republican-controlled Congress.

In an earlier statement to The Heights, Provost and Dean of Faculties David Quigley said he was troubled by the proposal.

I believe that numerous parts of this proposed legislation will result in increased costs as well as reduced access to higher education for talented and deserving students,” he wrote in an email.

But the final version of the bill, enacted on Jan. 1, may not be as damaging to the University as initially feared.

The original versions of the bill, passed separately by the Senate and House of Representatives, would tax the value of college tuition benefits granted to employees, eliminate a deduction in interest paid on student loans, and repeal the tuition tax break for graduate students.

None of these proposals were included in the final version of the law.

An excise tax on the endowments of private colleges and universities was introduced into the tax code. The 1.4 percent levy will apply to institutions with more than 500 full-time students and an endowment greater than $500,000 per student.

This will affect around 30 colleges, including Princeton University, Harvard University, and the University of Notre Dame, but not BC.

With a total enrollment of 14,419 students, according to the BC Fact Book, and an endowment of $2.4 Billion, BC has an endowment per student that is below the $500,000 level (approximately $166,447 per student), meaning that it will not incur the tax.

At the current enrollment level, the endowment would have to rise to approximately $7.2 billion for the University to meet the $500,000 threshold per student.

University Spokesman Jack Dunn did not respond to a request for comment. Provost and Dean of Faculties David Quigley declined to comment.

The law also retains the tax-free status of bonds, with some caveats. The tax-free status of Private Activity bonds, used to fund private projects that can be shown to have a public purpose, will be maintained, but the tax-free status of Advance Refunding bonds will not be continued.

Tax-free bonds were cited by Leahy as important to financing renovation and construction projects on campus. It is unclear what, if any effect, the changed structure in bond taxation will have on BC’s building campaigns.

Featured Image by Kaitlin Meeks / Photo Editor

January 25, 2018