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Financial Planning > Tax Planning > Tax Deductions

Democrat Wants to End Tax Deductions for Some College Donations

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The multimillion-dollar college admissions scam that has ensnared celebrities and financial executives is drawing the ire of lawmakers.

Sen. Ron Wyden, R-Ore., ranking member of the Senate Finance Committee, has announced that he plans to introduce legislation that would end the tax benefit for donations made to colleges and universities before or during the enrollment of children of the donor’s family.

“Headlines about the wealthiest Americans buying access to our elite colleges and universities is just a new version of an old story,” said Wyden in a statement. “While the prosecutor attempted to distinguish these crimes from payoffs in the form of buildings or stadiums to secure access for the undeserving, it is all part of the same corrupt system.”

The federal government “shouldn’t be perpetuating this system by awarding tax breaks to these contributions, contributions that return to the donor a benefit of inestimable value,” Wyden added.

The admissions scandal “is yet another example of how the tax code helps the wealthiest Americans get even further ahead,” Wyden said, stating that he’d introduce his legislation soon.

Rep. Bobby Scott, D-Va., chairman of the House Education and Labor Committee, said after the scandal broke that “the bribery and fraud uncovered in the college admissions scandal undermines the integrity of our higher education system and robs deserving students of opportunities they have earned.”

Scott added that while the defendants “are entitled to a presumption of innocence, this is an extreme illustration of a reality in our higher education system: Students from wealthy families and students from poor families are not treated equally. While illegal schemes are maddening and inflammatory, it is the legal and systemic inequality in college admissions and success that ultimately deprives countless students of the chance to reach their potential.”

A committee aide told ThinkAdvisor on Monday that while “there are no immediate plans to hold a hearing on the topic,” the Education and Labor Committee “is planning to examine a wide range of issues related to inequity in higher education.”

— Check out How to Reduce Student Debt and Increase College Affordability on ThinkAdvisor.


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