Under the to-be-updated tax code, thanks to a provision introduced by Sen. Ted Cruz, R-Texas, parents will be able to use 529 plans, a form of savings account, to pay not only for college, as is currently the case, but also toward expenses for K-12 schooling, including private school tuition.
The provision originally included home schooling costs, but was stripped from the final bill after the Senate parliamentarian ruled that part ineligible under budget reconciliation rules — the mechanism the GOP used to pass tax reform with a simple majority and not face a Democratic filibuster — in that there is no federal tax law related to home schooling.
Regarding Cruz’s school choice provision, “The 529 expansion is nice, but doesn’t do much to expand school choice,” a policy analyst from a national school choice organization, who asked not to be named, told Red Alert Politics. “It’s a tax shield for higher-income families, but doesn’t help lower-income families.”
The policy analyst continued, “Low-income families can technically benefit [it’s open to anyone], but they tend not to have much income to invest in 529 plans, or much of a tax liability, so it has very limited value to them.”
Another education-related provision was also modified, which levied a 1.4 percent excise tax on investment income at private colleges with a minimum enrollment of 500 students and with assets, like an endowment, valued at $500,000 for each full-time student. The original provision called for levying the tax at private higher education institutions with a minimum enrollment of 500 students, with assets at half the now-final cost per full-time student.
You must be logged in to reply to this topic.