On July 4th, President Trump signed the most recent budget passed by Congress – FY 2019 – into law. This budget makes momentous shifts for almost every sector—even public education and taxation. This legislation would alleviate urgently felt economic needs and make bold changes to the current tax code.
The biggest surprise during this budget process may be the extensive focus on education funding. Our new federal budget provides the tools focused on raising achievement for all kids and closing gaps that divide our nation. This investment will go toward improving facilities at K-12 schools, as well as colleges and universities. It holds the promise to expand access to quality education to millions more students.
The budget adds the proposal to change university endowment tax rules. The new law might alter the calculus for schools with the biggest endowments. This trend will continue to shape their financial strategies and further erode financial resources for student scholarships and campus enhancements.
Beyond these educational reforms, the budget makes important changes to state and local tax deduction limits. This dramatic shift will have huge consequences on American taxpayers, especially those living in SALT states. For one, it could change the level of property taxes they are able to claim as a federal tax deduction. Most taxpayers might soon find themselves facing drastically different individual tax burdens. This major policy shift is raising equity concerns on the collective impact across states.
Charitable giving is yet another area that would be severely affected by the new budget. The new legislation makes significant changes to the taxation of charitable giving. This would significantly change the incentives that drive Americans to donate to nonprofit institutions. This change could have profound effects on philanthropy’s trends and significantly impact the economic health of nonprofits that depend on individual giving.
Critics of the budget have expressed alarm over its long-term implications. Some argue that the new spending measure may add $3 trillion to the federal budget over the next nine years. This extraordinary boost has sparked passionate conversations and arguments on Capitol Hill and beyond. Now they are calling it unsustainable and about to blow a hole in the national debt.