Local schools, colleges urge 'no' on federal tax plan

Justin Murphy
Democrat and Chronicle
Provided photo
Brighton Central School District Superintendent Kevin McGowan.
Brighton Central School District Superintendent Kevin McGowan

As Congress prepares to vote on a sweeping slate of changes to the federal tax code, leaders of local school districts and the University of Rochester are warning of dire consequences to students if it passes.

The plan would slash the corporate tax rate and lower individual rates for many in exchange for eliminating a raft of currently available exemptions. The Senate version would also eliminate the Affordable Care Act provision requiring most people to have health care.

It is the elimination of some of those deductions that have New York school leaders worried. On the K-12 level, the New York State Council of School Superintendents released a statement Thursday warning that removing the state and local tax (SALT) deduction would have a "devastating impact on our state's ability to fund school aid and other public services."

More:House poised to vote on tax overhaul as bigger battle lies ahead

Brighton Superintendent Kevin McGowan pointed out how every single school district in the state had its budget approved last year and said that level of public support would not be possible with the higher federal taxes that would result from cutting the SALT deductions.

“New Yorkers have demonstrated that they value public services and have been willing to pay for those services," he said in a statement. "Cutting SALT deductions would make it much harder to preserve opportunities that our voters support, our families expect, and our students need.”

The superintendents group also announced its opposition to capping mortgage interest deductions, and to changing the 529 college savings plan to allow parents to save tax-free for private or parochial K-12 tuition as well as college tuition.

In higher education, meanwhile, several local colleges and universities are warning that eliminating deductions for student loan interest and teacher expenses, as well as a waiver on tuition benefits, would "greatly discourage participation in post-secondary education."

Rep. Tom Reed

In a statement released by U.S. Rep. Louise Slaughter, several local college presidents said eliminating the deduction for student loan interest would affect 40,000 people in Monroe County alone.

"If our legislators eliminate or repeal measures that help make college attainable for those choosing to pursue a degree, they signal a disinvestment in our nation's future," College at Brockport President Heidi Macpherson said in a statement. "These changes also would make it more difficult for graduates to repay college loans, with consequences for their ability to become productive citizens and consumers."

Research institutions such as the University of Rochester face an additional threat under the proposal. It would begin to count as taxable income the tuition waivers that many graduate students receive in exchange for teaching and research responsibilities.

A graduate student earning a $20,000 salary, and not being billed for $40,000 in tuition, would be taxed as if she earned $60,000 a year.

The greatest question is whether the new, lower overall rates would make up for the lost deductions. The federal Joint Committee on Taxation said they would in some cases, particularly for higher earners, but that there are winners and losers in every income tier.

JMURPHY7@Gannett.com