Education Issues at Stake as Senate Takes Up Tax Reform: State and Local Deductions, Teacher Supplies, Choice
Congress will be resuming its sessions this week, with tax reform taking center stage in the Senate. Education advocates are closely monitoring several significant provisions that could impact public schools.
One of the primary concerns for supporters of public schools is the Republicans’ attempt to remove federal deductions for state and local taxes. The Senate bill would completely eliminate these deductions, while the House bill would limit them to $10,000 for property taxes. If federal taxes increase, it could force state and local leaders to reduce taxes, which would jeopardize the main sources of funding for schools.
The Senate bill proposes to end the deduction for state and local taxes, resulting in a loss of $370 billion in tax revenue over a span of ten years. This could put 370,000 education jobs at risk, according to an analysis conducted by the National Education Association (NEA), the largest teachers union in the country. NEA President Lily Eskelsen García expressed her concern, stating that it is irresponsible to endanger funding for such a large number of education jobs. She also criticized the bill for providing significant tax breaks to the wealthy and corporations at the expense of students and working families.
The impact on school districts is expected to be felt in the 2019-20 academic year, although school officials may start preparing for it and adopting more conservative budgeting practices before that. Residents of high-tax states like New York, New Jersey, Maryland, and California would experience the most substantial tax increases if the state and local deductions are eliminated.
Noelle Ellerson Ng, Associate Executive Director for Policy and Advocacy at AASA: The School Superintendents Association, does not have much hope that a final version of the bill will maintain the deductions. She believes that although there are no strong policy arguments against the federal deductions, the revenue generated from their removal can be used by Republicans to counterbalance other significant cuts they are making. She points out that other significant savings, such as ending tax breaks for retirement savings, have already been considered and rejected.
Furthermore, Ellerson Ng is worried about large deficits in the future that could lead to cuts in federal education funding.
Higher education advocates are also concerned about the impact of the proposed tax reform. They are particularly worried about the taxation of graduate students’ tuition waivers and the elimination of the tax break on student loan interest. These issues, along with other concerns, are being raised by advocates in the higher education sector.
In addition to these concerns, there are several other key education issues that lawmakers will need to address in the final version of the bill. These issues include charter school financing for new school buildings and provisions for teacher supplies. The House bill would end key provisions used by charter schools to finance new school buildings, while the Senate bill would eliminate Qualified Zone Academy Bonds, which public schools use for renovations. The House bill also eliminated the $250 deduction for educators’ out-of-pocket expenses, while the Senate bill increased it to $500. The tax-preferred school choice programs are also treated differently in the two bills, with the House proposing to end the Coverdell program and expand existing 529 programs, while the Senate maintains the limitations on 529 plans.
Advocacy groups for school choice have expressed disappointment over the lack of a large-scale tax credit scholarship program in either bill, and they are urging the Senate to adopt the House’s approach.
On Monday, the Senate reconvened in Washington and is anticipated to address the tax bill later this week. However, the bill’s prospects are uncertain, as Politico reported that as many as six Republicans have expressed doubts. Moreover, the limited number of session days till the year’s end, which the Republicans have set as the deadline for tax reform, pose challenges. Additionally, there are numerous other matters, such as spending bills, that need to be taken into consideration in the meantime.
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