TAX REFORM AND THE HIGHER EDUCATION TAX BENEFITS
In 2013, then-Ways and Means Committee Chairman Dave Camp (R-MI) renewed efforts to have the committee seriously consider tax reform. The committee formally released a discussion draft of fundamental tax reform concepts that would generally eliminate most of the current credits and deductions across the board – in all areas of tax policy – in exchange for lower rates.
For higher education specifically, the draft proposed the elimination of all of the current higher education tax benefits, except for the American Opportunity Tax Credit (AOTC) and tax-favored Internal Revenue Code Section 529 college savings and prepaid plans. The AOTC would have lower income caps, eliminating nearly 50% of current students and families from the benefit, and it would not be available beyond the first four years of college. The draft also contained a proposal to impose an excise tax on certain private college and university endowments, and set a 2% floor on charitable deductions.