On Monday, congressmen Mike Bishop, Tim Walberg and Paul Mitchell touted why the recently house-passed Tax Cut and Jobs Act will benefit our state saying it’ll give the average Michigander a $2,700 tax cut. All three also agree that with large corporate tax relief people like the president of IMPCO Manufacturing will have the ability to grow.
“It’s pretty simple for us.” says IMPCO President Pat Cebelak. “We have to put more money on our bottom line and with that we can reinvest in the people, the business, the wages, the workers.”
These house-supported tax cuts may be good for business, but in return, they may be bad for college students. The American Council on Education and the Committee for a Responsible Federal Budget estimate the house’s Tax Cuts and Jobs Act would reduce tax benefits and savings for all college students by $65 billion over the next 10 years because it removes two important pieces for college students, the student loan interest deduction and tuition waivers. Tax season after tax season student loan borrowers who make up to $65,000 and married couples who make up to $130,000 used the student loan interest deduction to lower their taxable income by $2,500, but that’s now gone. Even more impactful within the Tax Cuts and Jobs Act is a repeal of section 117 of the current tax plan, a provision that provided tuition waivers.
Val Meyers with MSU Financial Aid says this is a major concern. She says tuition waivers are a huge incentive everyone uses in the American University System to get the best graduate students. In return for free tuition they work, teach, provide research and strengthen the school, but now the tuition waiver will be considered taxable income.
“So all of those things as a benefit for us to recruit great grad students,” says Meyers, “will be kind of off-set by saying to them, oh by the way, you are going to have to pay U.S. taxes on all of that benefit even though it’s not cash.”
The answer 6 News received about how the house-supported tax reform affects college students from local lawmakers was from Representative Mike Bishop.
“If you focus in on one deduction, one credit, you’ll be disappointed because those are gone, but if you apply this to the average family, the average student it’ll be a benefit to them and to all.”
An answer people with student loan debt may have to live with if the tax overhaul is successful.