Congress concluded its 2017 session with a week of productive legislating that included final passage of the Republican tax reform bill and an extension of federal spending through Jan. 19. The House also passed three bipartisan STEM education bills and a disaster relief spending package that, if enacted, would provide a one-time funding boost to several science agencies.
Capping a week of significant legislating, Congress concluded its 2017 session with final passage of the largest overhaul of the U.S. tax code in 30 years and a one-month continuing resolution (CR) that ensures the federal government will have the funding to keep the lights on through Jan. 19. Earlier today, President Trump signed both measures into law.
In the lead up this fall to final passage of the tax reform law, Congress considered several proposals that scientific societies and higher education associations warned would significantly increase the cost of graduate education, destabilize the finances of colleges and universities, and disincentivize the pursuit of degrees in STEM fields. Most of the concerning proposals were not included in the final law. However, two measures that could have a detrimental impact on institutional support for scientific research were included: the introduction of a 1.4 percent excise tax on the endowments of certain private colleges and universities, and an accounting tweak to the private industry R&D tax credit.
With the CR also now law, White House and congressional leaders have another month to reach agreement on fiscal year 2018 spending, including overall defense and non-defense discretionary spending levels.
On Dec. 21, the Association of American Universities (AAU) reiterated the call – which scientific and higher education organizations have been making persistently since summer – for “Congress to reach a bipartisan budget deal as soon as possible to raise both the FY18 defense and nondefense spending caps to permit sufficient investment in scientific research, higher education, and other important programs that sustain our nation’s global leadership.” A bipartisan deal to lift current spending caps to alift the current spending caps would free up funding that would go in part to support federal science agencies.
Also this week, House Science Committee Chair Lamar Smith (R-TX) declared Dec. 18 congressional “Science Day,” and the House passed three bipartisan STEM education bills the House Science Committee had approved in November. In addition, the House passed an $81 billion natural disaster relief bill that would appropriate supplemental funding to NASA, the National Science Foundation, the National Oceanic and Atmospheric Administration, and the U.S. Geological Survey, among other federal agencies. Any Senate action on these measures will have to wait until the new year.
The Senate will reconvene on Jan. 3, while the House reconvenes Jan. 8.
Final tax bill preserves education incentives, adds excise tax
When President Trump put his signature on the tax reform bill today, it ended a two-month whirlwind process led by Republicans to overhaul the federal tax code. The law immediately lowers income tax rates for most individuals while increasing the standard deduction. Starting in 2019, it also eliminates the Affordable Care Act’s individual mandate that penalizes individuals who do not sign up for health insurance. Most new provisions in the legislation will go into effect starting in the 2018 tax year.
Below are summaries of selected research-related provisions in the legislation.
Graduate tuition waivers: The legislation preserves the current U.S. tax code provision which makes certain tuition waivers exempt from taxation, including those given to graduate students who serve as teaching or research assistants. Science, engineering, and higher education organizations overwhelmingly opposed the repeal of the provision included in the House version of the bill.
Student loan interest deduction: The legislation preserves the current provision that allows taxpayers to deduct up to $2,500 of interest paid on qualified education loans.
Excise tax on higher education institution endowments: A new 1.4 percent excise tax will be implemented for investment income from certain private college and university endowments that have a value of at least $500,000 per student. Higher education organizations have strongly opposed the tax, with AAU President Mary Sue Coleman warning the provision is “a federal siphoning of the funds that support student aid programs [that] will make college less affordable and less accessible for our country’s students, [and] undermining our national interest in cultivating an educated, high-skilled workforce.”
State and local tax (SALT) deductions: The total deduction individuals can take from state and local property, income, and sales taxes will be capped at $10,000. Association of Public and Land-grant Universities President Peter McPherson says that the new limitations “could make it more challenging for states to generate revenue to support public higher education.”
R&D tax credit: The legislation keeps the private industry R&D tax credit intact but will now require businesses to capitalize and amortize domestic R&D expenditures over a five-year period instead of in a single year. Meanwhile, the corporate tax rate will decrease from 35 percent to 21 percent, and the corporate alternative minimum tax (AMT) will be eliminated.
Disaster aid package sails through House, stalls in Senate
On Dec. 21, the House passed, on a 251 to 169 vote, an $81 billion disaster aid package to support hurricane and wildlife recovery efforts. The bill would nearly double the amount requested by the Trump administration in November, which lawmakers from both parties had criticized as inadequate.
Like the administration’s request, the House bill includes funding for the federal science agencies, including:
- $200 million for NOAA, of which:
- $42 million is for repairing facilities, equipment, and observing assets;
- $40 million is for collecting new geospatial data to update maps and charts due to the significant changes to bathymetry, topography, and shorelines caused by the hurricanes;
- $50 million is to “improve weather forecasting, hurricane intensity forecasting and flood forecasting and mitigation capabilities, including data assimilation from ocean observing platforms and satellites;” and
- $50 million is for improvements to weather supercomputing infrastructure and satellite ground services used for hurricane prediction.
- $81 million for repairs to NASA facilities and equipment at Johnson Space Center in Texas and Kennedy Space Center in Florida.
- $16 million for repairs to NSF’s Arecibo Observatory radio telescope in Puerto Rico. (NSF estimated that it would cost $4 million to $8 million to fix the facility.)
- $42 million for USGS for “necessary expenses related to the consequences of Hurricanes Harvey, Irma, and Maria, and in those areas impacted by a major disaster.”
Senate Majority Whip John Cornyn (R-TX) indicated the Senate would not consider disaster relief aid until after the holidays. Democrats currently oppose the House’s bill, with Senate Minority Leader Chuck Schumer claiming the package “still does not treat fairly California, Puerto Rico, and the U.S. Virgin Islands.” It is expected the Senate will take up its own version in January.
House passes STEM education bills on ‘Science Day’
Sliding under the radar of these bigger ticket legislative items, the House passed three bipartisan bills aimed at broadening participation in STEM education programs at NSF. The House also cleared a resolution expressing support for the use of public-private partnerships to increase access to computer science education in K–12 classrooms. Chairman Smith had designated Monday, Dec. 18, as congressional “Science Day” in support of the measures.
The “STEM Research and Education Effectiveness and Transparency Act,” which the House passed by a vote of 376 to 9, would direct NSF to assess the effectiveness of its efforts to broaden participation of underrepresented groups in STEM fields and require federal science agencies to annually submit to NSF demographic information on all R&D grant applicants. The Congressional Budget Office cost estimate for the bill calculates a total cost of $61 million from 2018 to 2022. CBO also reports“the agency does not currently have the resources to collect and maintain the standardized, government-wide data on grant applications that would be required by this bill.”
The other two bills, which the House passed with near unanimous support, focus on increasing participation of women and veterans in NSF’s Robert Noyce Teacher Scholarship program. The “Women in Aerospace Education Act” would also direct NASA to implement policies that promote the recruitment of women and individuals in underrepresented groups for internships and fellowships in the aerospace sector, while the “Supporting Veterans in STEM Careers Act” would establish a new interagency committee within the White House Office Science and Technology Policy focused on STEM education for veterans and military families.
Following the bills’ passage, House Majority Leader Kevin McCarthy (R-CA) praised Chairman Smith’s leadership of the Science Committee and said the legislation would contribute to continued U.S. leadership in science:
This week the House voted to put America’s stamp on the future. We passed important legislation to support careers in STEM, aerospace, and more. Our nation and the world rely heavily on the breakthroughs of American scientists, and we have made sure, with the leadership of Chairman Smith, that we will continue to lead on these important issues.