Topeka The federal tax overhaul bill that passed the U.S. House and Senate on Tuesday and early Wednesday contains provisions that could have a big hit on university athletics programs, including the University of Kansas.
Kansas 2nd District Rep. Lynn Jenkins' office confirmed Tuesday that the final version of the bill would eliminate a tax deduction in current law for donations made to university athletic funds as part of a condition for purchasing season tickets, something KU and many other universities require.
Under current law, people who make those contributions can deduct 80 percent of the amount from their taxable income.
The bill also contains a provision that imposes a 21 percent excise tax on universities and other nonprofit organizations on the top five salaries they pay out that are more than $1 million.
That would apply to KU basketball coach Bill Self, who earns approximately $3 million a year, as well as KU football coach David Beaty, who earns $1.6 million a year.
KU Athletics spokesman Jim Marchiony did not immediately return phone calls or emails Tuesday seeking comment about how those provisions would affect KU sports programs.
Those provisions were relatively minor elements of a huge tax bill, the main features of which are to expand the standard deduction and child tax credit while lowering tax rates on corporations, small businesses and middle-to-upper income individuals.
House and Senate negotiators also removed provisions that had been in the original House version of the bill that also would have had a big impact on higher education. One of those provisions would have treated tuition waivers that many schools grant to graduate students as taxable income. Another would have eliminated a current tax deduction for interest paid on student loans.
Still, Kansas higher education officials have expressed concern that one key provision of the bill — the near doubling of the standard deduction for individuals and married couples — will mean fewer middle-income taxpayers will be able to itemize their deductions, thus removing any tax incentive they may have to donate to university endowment funds or other charities.
The tax bill passed the House, 227-203, with only Republicans voting yes. Twelve Republicans joined 191 Democrats in voting no. All four members of the Kansas delegation voted yes.
Early Wednesday, the bill also passed the Senate, 51-48, along party lines. Kansas Sens. Pat Roberts and Jerry Moran both voted yes.
Jenkins, whose district includes Lawrence, is normally considered a deficit hawk. But in a recent telephone interview that was conducted before the final version of the bill was released, she defended the tax plan, despite projections that it will add at least $1 trillion to the national debt over the next 10 years.
"One of the main goals of tax reform is to grow the economy," Jenkins said. "We have been stuck for the last eight years, and when you’ve got a debt the size of ours, you can’t tax your way out of it, you can’t cut your way out of it, you have to grow your way out of it," Jenkins said. "And so, key to this tax reform is asking economists, how do we get above 3 percent growth? And we have, at least in the House version, ensured that we will be able to grow the economy, which should increase revenues over the long haul."
Jenkins is not running for re-election in 2018. But Lawrence Democrat Paul Davis, who is running for the seat, issued a statement blasting the bill, comparing it to Gov. Sam Brownback's tax policies at the state level, which the Republican-controlled Legislature all but repealed earlier this year.
"Kansans learned the hard way that we couldn’t create jobs or move our state forward with a tax code that was upside down and backwards," Davis said in a news release. "The same holds true for our nation. Congress should go back to the drawing board, learn from Kansas' mistakes, and pass tax reform that prioritizes middle class families above special interest lobbyists."