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President Tsutsui on Tax Reform’s Impact on Higher Education

November 27, 2017

Dear Hendrix College alumni, faculty, staff, students, and friends,

At Hendrix, we have so much to be thankful for this year, from one of our most diverse student bodies in history, to welcoming new facilities on campus, to the many distinctions earned by our faculty, students, and athletic teams.   

But even on a lovely fall afternoon in Arkansas, it is hard not to be worried by the storm clouds gathering in Washington. At Hendrix, we are absolutely committed to keeping one of the nation’s top liberal arts educations affordable for all students and families. But managing costs amid political polarization and ever-increasing federal regulation is a challenge, even on a good day. That’s why I am troubled by the current tax reform legislation. A number of provisions would be extremely disruptive to higher education, to say the least.  

I am particularly concerned about the proposal to tax tuition assistance programs as income. These programs help us (and many other colleges and universities) recruit and retain talented employees in a very competitive job market. And they help many individuals, including those of modest means, further their educations. Under the current tax reform proposal, a Hendrix staff member who takes a course each semester toward a B.A. would have to pay personal income tax on the value of that benefit. Similarly, the numerous faculty and staff members who participate in tuition remission programs for their children would face steep new federal tax bills every year. Such a dramatic change to our tax code is not only mean-spirited, but it flies in the face of our shared faith that higher education is good not just for the individuals who receive it, but also for our society as a whole.

I am also worried about the proposed elimination of Private Activity Bonds, which have long allowed private colleges and universities like Hendrix (along with hospitals, retirement homes, and low-income housing projects) to issue tax-exempt bonds. This drastic and short-sighted change will hurt many non-profits by ending an important low-interest option for financing new investments in facilities and programs. 

Finally, even though the tax reform legislation as currently written would exempt Hendrix from the proposed federal excise tax on large college and university endowments, establishing such a levy would set a dangerous precedent for American private higher education. I am particularly troubled that the excise tax would only apply to endowments at private institutions and not public ones. Not only is this patently unfair, but it would also make higher education less accessible to students, especially those with limited financial resources, at institutions that offer high-quality academic programs and higher four-year graduation rates than their public peers. 

Tax reform, in whatever final form it takes, should not be funded on the backs of private, non-profit, church-affiliated colleges, their hard-working employees, and the students who depend on institutional financial aid to make ends meet. If you agree, I encourage you to take a moment to contact your elected officials and share your concerns about the impact of tax reform on higher education.

Thank you for all that you do for Hendrix.

All the best,

William M. Tsutsui

President and Professor of History