On November 16, the House of Representatives passed its Tax Reform Bill – H.R. 1 – “The Tax Cuts and Jobs Act”. While many scrambled to decode the far-reaching changes to the tax code, Beth Medrash Govoha’s Government Affairs Department zeroed in on a provision which would devastate the finances of mechanchim, teachers, and staff of K-12 schools, Yeshivos and seminaries.
H.R. 1 completely eliminates the IRS Code Sec 117(d) Qualified Tuition Reduction exemption (QTR), which is currently a pre-tax (i.e. tax free) benefit for educators. Educational institutions pay tuition for an employee or that employee’s children at any K-12 or undergraduate-level educational institution, and that does not count to their federal income. (This provision also affects tuition waivers given to Graduate Students, which could have practical ramifications for kollel yungeleit as well.)
If this cut goes through, mechanchim and staff receiving free or reduced tuition for their children at the schools in which they themselves teach may have to pay taxes on those tuition breaks. This will also end the current ability of mechanchim to receive tax-free tuition benefits that cover tuition for their children at other elementary schools, mesivtos, seminaries and bais medrash Yeshivos.
Compounding the pain, these tuition breaks and payments would now become part of their Adjusted Gross Income, rendering potentially thousands of modestly-paid mechanchim and school employees no longer eligible for many government benefits.
Recognizing the tremendous concern posed by the possible elimination of QTR, BMG’s Government Affairs Department went into action under the close guidance of Rabbi Aaron Kotler, the President of BMG, and BMG’s Co-Chairman and Government Affairs Committee Member Howard Tzvi Friedman, who is at the forefront of national political activism and askanus.
The first step was to fight this cut in the Senate version of the bill. With great Siyata Dishmaya, the Senate version preserved the status quo on Qualified Tuition Reduction. This meant that the fate of the mechanchim would be decided by a Conference Committee which hammers out a final bill between the Senate and the House.
With the Senate sympathetic, the BMG team got to work on the Conference. The key was to find a way to convince the House Republican leadership and Congressmen on the Conference Committee to reconsider their elimination of QTR and agree to the Senate’s move to protect the exemption; while simultaneously reaching out to key Senators to shore up their support for the provision and ask them to stand strong in Conference.
“We sent out a call for help to our network of two dozen key askanim from coast to coast, asking everyone to call on their contacts and make a pitch for this important program,” explains Mrs. Chanie Jacobowitz, Director of Government Affairs at Beth Medrash Govoha. “They responded with alarm and highly effective advocacy, getting the message through in a focused way to leadership at the highest levels and key members of the Conference Committee.”
The group of askanim at the forefront of this issue includes Mr. Howard Tzvi Friedman, Dr. Irving Lebovics of California, Mr. Yoel Rosenfeld of New York, Rabbi Yechiel Kalish of Illinois and Ohio, Mr. Yaakov Polatsek of Texas, Mr. Moishe Tress of New Jersey, Mr. Jason Lyons of Florida and Mr. Yehuda Neuberger of Maryland, as well as a number of others.
The incredible duo of Rabbi Abba Cohen and Rabbi A.D. Motzen of Agudath Israel have been tireless advocates and partners in this effort. They have been tracking this issue closely, and their action alert to the grass-roots last week mobilized hundreds of people to call their Representatives. Torah Umesorah has joined in this effort as well, as Rabbi Zvi Bloom and Rabbi Binyomin Holland are working to rally the mosdos to speak up at this crucial time.
Many Members of Congress were unaware of the devastating impact on educators in the US; they had perceived the K-12 and undergraduate provisions as applying mostly to wealthy professors at Ivy-League schools. Now the message is clearly getting through. The leading national Askanim have been reporting back with expressions of support from the Republican leadership and key members. However, as the Conference Committee gets ready to convene, the road ahead remains uncertain; the situation will be fluid with everything on the table until a final agreement is hammered out. All involved must redouble their efforts with siyata dishmaya and tefillos for a positive result for the dedicated mechanchim and staff of mosdos across the country. Further updates will be provided as this situation continues to unfold.
To access the Agudath Israel action alert, click here.
Qtr will help some.
Why isn’t BMG and Agudah pushing to make Private School tuition deductable as a charity expense?That would help all of us.
It was in the Senate bill and it was crossed out on the last night.
It can still be pushed in during committee.
This is the final time to get something done in Congress.
+1 Yakov
As someone involved in financial aspects of mosdos for many years, this would be devastating. As a middle class myself, Ican relate to comment #1’s frustration of not getting tax benefits forf tuition payments. Yet, in comparison, the effect of removing the QTR would be astronomical. For the average rebbe/teacher with several school age children, this allows them to “make it” somewhat financially. Removing it would effectively cause those involved in chinuch to pursue other employment.
qtr will also affect everyone. Rebbeim and teacher salaries are going to have to increase dramatically which will cause tuition to go up as well.
You reap what you sow. Did you think voting in republican’s would actually benefit you? Hate to say I told you so, but they only have the interests of the billionaires in mind.
Excellent point! This is the time to finally push this. We cant sleep by the wheel and assume it will never get done. At the very least they will see that it is a huge need to ALL of the orthodox.
Time to push vouchers in as well. Vouchers will help the Rabaim problem.
To all those that are busy with vouchers , isn’t it obvious that we are having a hard time keeping the old programs (QTR) how can you expect instituting new ones !?
So insane for ppl to hear the word askin and right away jump on them to fix all their issues! I’m waiting for the next guy to say property tax ….
The Trump/Republican tax hike is among the worse in recent memory. It targets the middle class so that people cannot deduct their state income tax and all of their property tax. The outcome will be more landlords (since they can deduct expenses) and less home ownership, less American families since they are replacing exemptions with a higher standard deduction.
The Republicans are undermining the policies of the tax code which are favorable to home (property) ownership and large families. Kind of like the course that the Romans took when they declines.
Jason (Yaakov) Lyons in Florida who is mentioned in the article is a tzadik. he is willing to help any yid in need.
The rest of the tuition paying public have to cover the cost of free tuition for Rebbeim. And the rest of the parents dont get a break at all.
true. But the also get stellar rebbeim and teachers who give all of their time, energy and talent for a salary far beneath their qualifications….who really comes out ahead? ( hint:it’s your kids)