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Congress Approves Tax Extenders; Incoming Finance Chair Outlines Tax Reform

December 19, 2014—The Senate Dec. 16 approved, 76-16, a package of tax breaks for individuals and businesses, sending it to the president for his signature. The Tax Increase Prevention Act of 2014 (H.R. 5771) extends for one year tax provisions of interest to medical students, medical schools, and teaching hospitals. The measure passed the House Dec. 3 [see Washington Highlights, Dec. 5].

The bill would extend through 2014 the above-the-line deduction for qualified tuition and related expenses for higher education. The deduction is capped at $4,000 for an individual whose adjusted gross income (AGI) does not exceed $65,000 ($130,000 for joint filers) or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers).

Of importance to research institutions, the bill would extend the research and development (R&D) tax credit. The R&D credit generally allows taxpayers a 20 percent credit for qualified research expenses or a 14 percent alternative simplified credit.

The legislation would also extend the availability of tax-free distributions from individual retirement plans for charitable purposes. The exclusion may not exceed $100,000 per taxpayer in any tax year.

Senate Finance Committee Chair Ron Wyden (D-Ore.) opposed the measure, saying, “Nearly all of the $41 billion in this legislation is going to go to things that happened months and months ago.”

Meanwhile, Finance Committee Ranking Member Orin Hatch (R-Utah), who will chair the committee in the 114th Congress, Dec. 11 released a report titled “Comprehensive Tax Reform for 2015 and Beyond.” Regarding higher education tax incentives, the proposal focuses on “whether Congress is encouraging higher education tuition inflation and a student-debt bubble.”

Ultimately, the report calls for consolidation and simplification, but does not include the cuts to student aid tax incentives proposed in February by House Ways and Means Committee Chair David Camp (R-Mich.) [see Washington Highlights, Feb. 28].

In a Dec. 16 floor speech, Sen. Hatch outlined seven principles of tax reform. He noted that the report is “a first major step in a tax reform effort that I hope will get underway early next year” and in the coming months he plans to reveal additional steps. He said, “I plan to involve many of my colleagues on both sides of the aisle, particularly those who will be joining me on the Senate Finance Committee. My hope is that, as this conversation continues, a path toward real bipartisan tax reform will begin to take shape.”


Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-862-6116


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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