In a letter to all members of the New York State Congressional delegation, Cornell President Hunter Rawlings has expressed concern over a tax plan approved by the U.S. House of Representatives' Ways and Means Committee last week.
Rawlings said that, while the tax plan includes some worthy reforms, such as the Hope Scholarship tax credit and other inducements for savings, it would adversely impact many segments of the higher education community.
The plan, approved June 12 by the Ways and Means Committee, would provide about $31 billion in tax breaks to help people pay for college, far less than the $40 billion in President Clinton's proposal. The Republican-sponsored package also contained several provisions that would impose costly new taxes on college employees. "While we certainly welcome some of these provisions that would benefit many of our students and families, we vigorously oppose other proposals," Rawlings told the Chronicle. "If enacted they would inflict financial hardship on many members of the higher education community, including graduate students, faculty, staff and retirees. Instead, we must seek to make higher education more accessible for all."
Under the Ways and Means plan:
The loss in retirement savings would result from the House-proposed revocation of TIAA-CREF's 80-year-old tax-exempt status regarding pension business, which would potentially reduce benefits to the 1.8 million participants -- including thousands of Cornellians -- in higher education's biggest pension company. The bill also would impose a tax of up to one-half of one percent on the pension funds' assets, which now total $90 billion.
The chief executive officer of TIAA-CREF, John H. Biggs, said last week that the cost to participants in the pension funds would be much greater than that. He estimated that the tax would cost the pension company between $250 million and $400 million a year, an amount that would be passed on to the plans' participants in a cut of 3 percent or more in the investment income they receive each year.
Rawlings also said the country's leading private universities continue to be seriously hampered in renovating and replacing obsolete facilities -- facilities that drive part of the nation's unparalleled research and high-technology enterprise -- due to the lack of access to adequate tax-exempt bonding levels. "Repeal of the current $150 million bonding cap, or at least a sizable increase in the bonding cap ceiling, is sorely needed," he said.
The tax plan now awaits a vote by the full House of Representatives. A separate bill will be introduced in the Senate this week.