While a reasonable improvement when it comes to simplification, the Republican tax bills still contain a number of targeted provisions for various special interests. Such is politics, unfortunately.
Some of these carve-outs are more defensible that others. We’ll see what survives the House-Senate reconciliation efforts. But on the plus side of the ledger is a little-noticed provision in the Senate bill that will make it easier for families to sock away money for education expenses, including private school tuition.
Parents of young children may be familiar with so-called 529 accounts, which are designed to encourage saving for future college costs. Under these plans, families avoid paying state and local taxes on accrued earnings as long as they use the money for qualified higher education expenses, including college tuition, room and board or book purchases. Contributions are still treated as taxable.
The Senate tax measure expands these 529 accounts to include K-12 education costs.
The proposal would increase the number of educational options available to parents and their children. So, naturally, members of the hidebound educational establishment — the folks who have brought you a public schooling system that struggles to deliver on even its most basic assignments — are up in arms.
“In our view, it’s further incentivizing wealthy Americans to educate their children in private school settings,” Sasha Pudelski of the American Association of School Administrators told The Washington Post. “It’s a chance to divert public resources — in this case revenues — into private educational settings.”
Imagine for a moment that the Republican tax proposal eliminated the tax advantages for college savings accounts. Ms. Pudelski and friends would no doubt be screaming from the hilltops about the damage such a move would do to middle-class families dealing with soaring college costs. Yet when the GOP attempts to expand the idea to provide parents forced into substandard schools with more choice at the K-12 level, they’re nefariously trying to “divert public resources” from education.
More sensible was the assessment of Tom Carroll, director of #EdTaxCredit50. Mr. Carroll points out that more than 75 percent of the $300 billion currently sitting in 529 college savings accounts are in the hands of families earning $150,000 or less. Far from benefiting only the wealthy, such accounts have helped millions of working- and middle-class parents get their children through college. “This bill will make sure more of our children are career- and college-ready,” Mr. Carroll noted in a statement last week.
It’s true that low-wage earners with little disposable income and no income tax liability are unlikely to benefit from the expanded 529 program. That’s why advocates of school choice must push for plans at the state and local level that make it easier for such parents to escape schools that are failing their children — Nevada’s stalled Education Savings Account program offers a reasonable blueprint.
In the meantime, however, the expansion of the 529 program represents progress and reflects “that education should be an investment in individual students, not systems,” said Education Secretary Betsy DeVos.
Amen. Congressional Republicans should ensure that this measure remains in the final tax bill.