By Steven C. Beering
Buried in a tax-relief package, recently passed by the U.S. House Ways and Means Committee, is a revocation of the tax-exempt status of the Teachers Insurance and Annuity Association-College Retirement Equities Fund.
TIAA-CREF is the principal retirement system for nearly all of the colleges and universities -- public and private -- in the United States. It has been tax-exempt since TIAA was founded in 1918. The Ways and Means proposal, if passed by Congress and signed into law by President Clinton, would be a direct assault on the pocketbooks of some 2 million participants who work in America's higher education system, or who already have retired.
Less directly -- but even more destructively -- it would be an attack on higher education and the people it serves. At a time when our nation is fighting to compete in a global economy which rewards brain power, technical know-how, and innovation above all else, should our government be contemplating legislation that would reduce the incomes of educators by 3 to 5 percent?
Retirement savings currently are tax-exempt for all workers. To impose a tax arbitrarily only on the retirement plan for educators not only is unfair to those people, it is detrimental to our society. While both major political parties talk publicly about creating opportunities for the young, encouraging lifelong learning, and improving the quality of the educational system, we should be giving people reasons to choose careers as professors.
Nine years ago, Congress looked closely at this issue. In the Tax Act of 1986, it imposed a tax on TIAA-CREF's non-pension business but reaffirmed the exemption of TIAA-CREF's pension business. If our lawmakers look carefully at the current House proposal, they will reach the same conclusion. The danger is that they won't make the effort to understand the consequences of a change that would be unfairly punitive to one group of professionals and would discourage commitment to teaching at a time when education is our most valuable resource.
Let's hope they are doing their homework, but people impacted by this proposed legislation and anyone who cares about the future of higher education should be expressing concerns now to their elected representatives in Congress.