When Professor James Wittenbach asked his graduate students to develop a new tax law proposal, he never imagined what would result.
What Tax Research/Tax Policy students James Flaherty, Andree Johnson and David McCormick originally deemed an opportunity to meet classmates turned into a trip to Washington D.C to potentially change a federal tax law.
Wittenbach spoke to Notre Dame graduate Jim Jaeger, Deputy National Tax Managing Partner for Deloitte, over the summer to expand his course's icebreaker into a more serious aspect of the class.
The 36 students in the class divided themselves into groups of three to develop tax law proposals they felt would benefit taxpayers, as well as the economy and the environment.
Professionals from Deloitte & Touche along with Professor Ken Milani, advisor to the Tax Assistance Progam, judged the class' 12 proposals.
Flaherty, Johnson and McCormick's proposal, focused on education and also on providing financial rewards for graduates and their parents, was chosen by Deloitte and Milani to be presented the National Tax Office of Deloitte in Washington D.C.
The three winners put in a "decent amount of time" outside of the classroom doing research and developing their ideas, Johnson said.
"Being graduate students, we have all been through quite a bit of education to date," Johnson said. "The assignment was to make one change to the way income taxes are computed, so naturally we turned our thoughts to education and whether or not there was room for a new credit in the current tax code."
Flaherty said they "felt that this was a pressing need for our country when looking at education levels across the board."
The students' proposal includes a $1,000 tax credit for the parent or legal guardian of a high school graduate, a $2,000 tax credit for the student graduating with a bachelor's degree and a $1,000 credit for the student graduating with a master's degree or higher.
"This proposal would benefit all individuals as well as the government," McCormick said.
"Education is more valuable now than ever, and providing incentives to graduate at all levels will make people strive toward becoming more educated," Flaherty said. "The government wins because through increased levels of education, the nation will see a more skilled, more productive work force, from which an increase in tax receipts collected will follow."
The students said these tax credits are designed to encourage students to complete their education as well as offset the high debt many students have following their education.
Wittenbach said Deloitte & Touche was probably most impressed at the easy administration of this proposal. It is similar to the child tax credit that currently allows the parents of children under 17 to obtain a $1,000 tax credit.
The plan proposed by the students can easily be altered and piggybacked onto this law, Wittenbach said.
"The problems associated with not graduating high school are astronomical ... think of what the government [can] earn in the long run," he said.
If these incentives increase the high school graduation rate, this plan will initially cost the government up to $1.3 billion, the students said. Ultimately, however, after the graduates become productive, tax paying members of society, the government will receive up to an additional $50 billion in federal and state income taxes.
McCormick said their time in Washington "was quite the learning experience, as [they] found out how an idea such as [theirs] still has many hoops and hurdles to go through until it could possibly become a law."
Wittenbach said this "was an invaluable learning experience," and the students learned things "[you] can't teach in the classroom ... to actually talk to Congressmen and see committees in action is a unique experience."
The next step for Flaherty, Johnson and McCormick is to submit their proposal to the senators and representatives of their states.
"You never know when it's going to be a seed that gives birth to a new tax law," Wittenbach said.
