The university is under assault – politically and economically. As you may have read, the House Bill (but not the Senate Bill) would tax student tuition waivers as if these waivers constitute income. But the assault on the university is far broader. According to a document circulating in the higher levels of the administration:
- With the proposed increase in standard deductions, Berkeley would face reduction in gifts of around $23 million annually. (Both Senate and House Bills)
- Proposed doubling of estate tax exemption would give rise to estimated reduction of $21 million annually in planned estate gifts. (Both Bills)
- Repeal of College Athletic event seating rights as a charitable deduction would mean loss of $11 million annually for Cal Athletics. (Both Bills)
- Excise tax on executive compensation of football coaches receiving more than a million dollars in income and benefits would cost Berkeley (!) $1.24 million annually. (Both Bills)
- Elimination of State and Local Tax Deductions has unknown but negative effects. (Both Bills)
- Repeal of “Unrelated Business Income Tax” would have “drastic” impact on UC Pension funds. (House Bill more drastic)
- Taxation of tuition waivers would increase taxable income of Berkeley graduate students by $150 million. (House but not Senate Bill)
- Repeal of deduction based on Interest on Student Loans. (House but not Senate)
- Taxation of employer provided education assistance for employees. (House but not Senate Bill)
Many of the proposed changes weaken the administration’s current strategy of seeking to offset the decline in state support by increases in private philanthropy. The more we model ourselves as a private corporation, the more we will be taxed like a private corporation without special exemptions. At the same time, we are still a public entity, so the shenanigans at the highest levels of UCOP (see below) put us in an ever worse light, undeserving of tax breaks or state funding.
Chair of the BFA.
Berkeley Faculty Association