Question

A) Outline a positive set of outcomes that could follow the recent tax cuts in the United States.

B) Outline a negative set of outcomes that could follow the recent tax cuts in the United States.

( Based on College economics )

Answer 1

The recent tax cuts include a reduction in corporate tax of $1.5 trillion and the same has important bearing on college students and college education. Most of them are going to adversely affect the college education.

• Tax Cuts and Jobs Act are likely to decrease the tax benefits as well as the savings for all college students. This reduction is estimated to be worth $65 billion over the next 10 years. (Negative outcome)
• The bill would repeal the interest deduction on the student loan that has allowed the student loan borrowers to lower their taxable income by $2,500. This would allows students with student debt to save a maximum of $625 a year (positive outcome)
• There is a reduction in the benefit available under Amercian Opportunity tax Credit which is collected by Parents in 5th year of their ward's college. Lifetime Opoortunity Credit that allows students to claim $2000 benefit is also eliminated (negative outcome)
• There is an expected increase in the taxes for graduate students by 400 percent. Also the tuition waivers will be taxed as income. (negative outcome)