LSU president: Tax reform should not come on backs of students, universities
With the end of 2017 approaching, LSU President F. King Alexander takes some time in a new guest column to reflect on the gifts the university has received this year. But he also raises concerns about what lies ahead if federal tax reform proposals pass without modifications.
LSU, Alexander writes, received a $12 million gift for its Honor’s College, a $5.6 million gift from the Koch Foundation to support entrepreneurship programs, and alumna Janice Pellar gave $1 million to the College of Music and Dramatic Arts.
“But gifts from foundations and individuals—both of which are vital to supporting universities in this age of shrinking state budgets—could be substantially curtailed if current tax reform efforts go unchanged,” he warns.
The proposed tax reform proposals will remove the deductibility on many donations, potentially eliminating an important incentive for many donors to give, he writes. These donations include those from sports fans who indirectly contribute to LSU’s athletic and academic programs through gifts connected to the purchase of season tickets.
The House’s tax plan also would repeal the estate tax, which is the source of upwards of 30% of LSU’s donations annually. And the proposed tax on private foundations would increase, meaning fewer donations from institutions to universities.
The timing couldn’t be worse for LSU, which is embarking on its biggest philanthropic campaign effort to date, Alexander notes.
“Unfortunately, the new tax reform bill seeks to balance corporate tax reductions on the backs of students and the universities educating them,” Alexander writes. “If passed without important modifications, our public universities will be faced with even bigger challenges at a time of increasing state funding instability.”
The unintended consequences that House and Senate versions of the bill would bring are far-reaching and long term, he writes.
For example, donations to the tax-deductible Tradition Fund pay for about 40% of athletic scholarships, support 15 non-revenue-generating sports as well as stadium renovations—facilities also used as evacuation and special needs shelters during emergencies.
However, specific tax reform provisions will eliminate the deductibility of such gifts, Alexander writes. This could potentially result in ticket cost increases, scholarship reductions, elimination of athletic programs, and decreased student affordability.
“Before reading this, you may have thought the implications of proposed tax reform on higher education would be minimal and easily rectified,” he writes. “I hope that now you see that these unintended repercussions are wide-ranging and damaging, hurting students, families, and the universities that support them. Here in Louisiana, where we already lag at 49th in the nation in terms of college degree attainment, the residual effects of these impacts could linger for generations.”