NAICU Washington Update

Senate Finance Committee Eyes Competitiveness, Tax Incentives

April 07, 2007

Senate Finance Chairman Max Baucus (D-Mont.) has begun an examination of the role of higher education and U.S. competitiveness in a global economy. Witnesses at the committee’s March 20 hearing, "Realizing a Competitive Education: Identifying Needs, Partnerships and Resources," included representatives from the K-12 education and community colleges, as well as education-based foundations and state systems.

NAICU submitted for the record a statement on competitiveness and the role of the federal tax code in encouraging and assisting with the investment in higher education. We expressed support for the many tax incentives enacted over the past ten years, and urged the committee not only to maintain them but to strengthen and make them permanent. The NAICU statement also called for making both the tuition deduction for higher education expenses and the IRA charitable rollover permanent. Both items are currently set to expire at the end of 2007.

We indicated our willingness to work with the committee in simplifying or consolidating the Hope and Lifetime Learning tax credits and the tuition deduction, but also noted the importance of ensuring that no one currently receiving a tax break lose out under a consolidated plan. It will be equally important that any new super-credit or deduction not result in an increased reporting burden on our institutions.

Finally, we expressed support for IRC Sec 127, employer-provided education assistance, and restoring the tax-free treatment of scholarship and grant amounts used for room and board expenses. There would be no better competitiveness initiative than allowing working students and their employers to enjoy the benefits of Sec. 127, given that many of these working students are science, technology, and engineering majors.

NAICU offered to work with the committee and Congress to generate, advance, and sustain the talent of our workforce. A comprehensive competitiveness agenda will be multijurisdictional, involving increased funding and other education initiatives. However, we can also support students, colleges and universities, and partners in industry by strengthening and continuing the important tax initiatives outlined in NAICU’s statement.

The Finance Committee is expected to pursue legislation addressing competitiveness issues, though the time line is uncertain.

For more information, contact Karin Johns at NAICU,

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