Congress created the scholarship tax exclusion in 1954 despite IRS opposition
Evidence
In the early days of the income tax, the IRS took the position that receipt of a scholarship in exchange for education was an exchange of services, which made scholarships taxable income. Congress, however, disagreed. In 1954, the same year that Brown v. Board of Education was decided, it established a tax exclusion for scholarships. Those milestones, plus the creation of Pell Grants for low-income families as part of the Higher Education Act of 1965, led to significant gains in college attendance rates. The number of white men, white women, and black women attending college had nearly doubled by 1970; the number of black men tripled. — Dorothy A. Brown, The Whiteness of Wealth, 319
Categorization
Category: Factual Claims
- DEFINE: Establishes the 1954 scholarship exclusion and that scholarships were once taxable, a useful historical baseline.