States, including Illinois, Oklahoma and Arizona, have for years offered similar charitable funds that grant scholarships to private and religious schools. Treasury’s SALT regulations, which became final in June, ended up putting limits on the federal tax breaks those donors could claim.
Scholarship granting organizations have received fewer donations as a result of the rule change, said Leslie Hiner, vice president of legal affairs at EdChoice, a school choice advocacy group. States offering credits worth 50% of the donation have seen contributions drop by about 20% to 30%, and states with more generous tax breaks have seen funding levels fall even further, she said.
“When they lose a source of revenue students are at risk of not having a scholarship funded,” Hiner said. “We don’t know the full impact yet, but scholarship granting organizations have seen pretty sizable losses across the board.”
Democrats have so far been unsuccessful at any attempt to mitigate the SALT changes. Last month, a federal judge tossed a lawsuit brought by New York, New Jersey, Connecticut and Maryland to invalidate the tax law’s $10,000 deduction limit.
House Democrats are also working on a plan to increase the deduction limit or repeal it entirely, though any legislative action would likely stall in the Republican-led Senate.
Even if the Senate Democrats’ bid to repeal the regulations doesn’t pass, the effort allows them to show voters they’re working on the issue. Schumer, a New York Democrat who has called the tax law “a devastating blow,” said he’s “very excited” to force the vote on the Senate floor.
--With assistance from Kathleen Miller.
This article was provided by Bloomberg News.