UPDATED: Jan. 16, 2018 at 12:38 a.m.

At Syracuse University and college campuses nationwide, the GOP’s new tax bill isn’t exactly popular. Its tax on graduate student tuition remissions and cuts to corporate taxes has students rallying against its passage and Syracuse residents planning protests in front of Rep. John Katko’s office.

Despite a letter from SU Chancellor Kent Syverud urging him to vote against the Tax Cuts and Jobs Act, Katko (R-N.Y.) has supported the bill — and for good reason. He believes a majority of his constituents will receive a tax cut under the plan, giving businesses the power to make larger investments into the workforce. Considering Syracuse’s high unemployment rate and struggle to attract new businesses, this bill is exactly what the city needs.

The House’s version of the tax reform bill passed last week, and the Senate’s version — which notably lacks those education cuts — passed Saturday. Now, the two chambers will bring the bills together and reconcile their differences.

Kevin Camelo | contributing designer

A notable piece of the legislation is its corporate tax cut, which drops the tax rates for big businesses from 35 to 20 percent, per The Washington Post. It’s also the piece of the bill Syracuse needs most.

“If (businesses) use lower corporate tax rates to make capital investments, then it will lead to greater labor productivity, more jobs, more expansions and a higher growth level,” said Don Dutkowsky, a professor of economics at SU, made it clear just how beneficial a corporate tax cut could be.

The challenge comes with compensating for that corporate tax cut. Skeptics argue that even if businesses repurpose their saved tax money and expand, their increased revenue won’t offset the tax cut’s cost to the government.

By crafting tax reform that benefits businesses, legislators are forced to find alternative sources of revenue. That’s where the tuition benefit tax comes in, and it has college students reeling.

The tuition benefit tax is one of several parts of the bill aimed at higher education. Under it, researchers and teaching assistants would have to pay taxes on waived tuition that’s covered through scholarships. Colleges with endowments of more than $100,000 per student will have to pay an excise tax on that investment income.

Dutkowsky said he feels the new measure is an assault on higher education due to a growing GOP skepticism of its contribution to society. The criticism is valid, considering only 27 percent of college graduates had jobs related to their major in 2013, according to The Washington Post.

Yet, that only shows how higher education fails to produce positive results for the economy and shows how a tax could pressure higher education to reform. Taxes aimed at higher education could raise the value of a degree, especially as it applies in the workforce, and could force colleges to ensure that degree pays off with a career.

Likewise, business owners will have to prove they’ve earned a tax cut and repurpose those benefits to improve the economy. The Tax Cut and Jobs Creation Act is an investment in the business owners who provide jobs and teach skills that can’t be gained through college alone.

Dutkowsky did note that history shows tax cuts do not guarantee bigger economic growth and more tax revenues coming in from that growth. But the current corporate tax rate of 35 percent is the highest industrial tax in the world and is clearly a burden on businesses. That’s why so many corporations are driving to take away American jobs and move them overseas.

Relieved from the tax burden, businesses will likely increase wages and create jobs both directly and through buying more equipment, investing in new technology and expanding domestic operations.

And even though the corporate tax rate could jack up the deficit, Dutkowsky said this is relatively inconsequential when looking at the economy as a whole.

“It is not the end of the world to increase the deficit or debt if the economy is healthy as a result of the corporate tax cut,” Dutkowsky said.

Still, the House and Senate should look to minimize the deficit as they reconcile their two versions of the bill. But it shouldn’t come at the expense of the business-benefiting, job-creating corporate tax cut.

Joshua Nelson is a senior political science major. He can be reached at jqnelson@syr.edu and followed on Twitter @joshqnelson.

CORRECTION: In a previous version of this post, the proposed corporate tax rate decline was misstated. The tax rate would drop from 35 percent to 20 percent. The Daily Orange regrets this error.

Published on December 4, 2017 at 10:48 pm