House tax bill retains vouchers; Senate bill introducedScott Rothschild
The U.S. House of Representatives’ Ways and Means Committee on Thursday reported out its tax reform bill, which includes expanded tuition tax credits (vouchers) for private K-12 education. It also eliminates some deductions for state and local taxes, potentially harming state and local government budgets.
Also on Thursday, the U.S. Senate introduced its version of tax reform legislation, which contains several provisions that could be detrimental to public education.
The Ways and Means Committee voted on party lines to advance H.R. 1, the “Tax Cuts and Jobs Act,” to a vote of the full House of Representatives. Congresswoman Lynn Jenkins, R-Topeka, who serves on the committee, voted “yes.” You can read her statement on her vote here.
H.R. 1 provides for the expansion of Coverdell accounts, also known as “529 plans,” to allow parents to put aside up to $10,000 per year tax-free for tuition payments to public, private or religious K-12 elementary and secondary schools. Kansas public schools do not charge tuition. The current annual Coverdell limit is $2,000. Tuition tax credits operate like vouchers by diverting students and resources from public schools to nonpublic schools. KASB opposes any legislation that would use tuition tax credits or voucher systems to aid private elementary or secondary schools.
KASB members should contact their members of Congress immediately to ask them to oppose the expansion of tax credits for private schools:
Rep. Roger Marshall: Washington, D.C.: 202-225-2715; Garden City: 620-765-7800; Salina: 785-829-9000.
Rep. Lynn Jenkins: Washington, D.C.: (202) 225-6601; Topeka: (785) 234-LYNN (5966); Pittsburg: 620) 231-LYNN (5966)
Rep. Kevin Yoder: Washington, D.C.: (202) 225-2865; Overland Park: (913) 621-0832
Rep. Ron Estes: Washington, D.C.: (202) 225-6216; Wichita: (316) 262-8992.
H.R. 1 also limits taxpayers’ ability to deduct certain state and local tax payments from their federal tax returns. While the bill retains the mortgage interest tax credit, it limits property tax deductions to $10,000 for those who itemize and would eliminate the deductibility of other state and local taxes on the federal tax return.
The National School Boards Association in a letter to Congress characterizes SALT as “the major source of investments in our nation’s students and public-school districts.”
A Government Finance Officers Association analysis of the impact of state and local tax deductibility (SALT) notes the deductions provide a strong incentive to home ownership, particularly among the middle class. Home ownership, in turn, provides property taxes that support local government entities such as school boards. The analysis says 25 percent of Kansas taxpayers take advantage of the SALT deductions for an average deduction of $9,425.
The Senate Finance Committee introduced its tax reform measure on Thursday as the House committee was finishing its work. Kansas Senator Pat Roberts is a member of the committee. Chairman Orrin Hatch said the panel will begin debating its bill on Monday, Nov. 13.
While full details are still being released, the Senate bill delays some corporate tax reductions for a year, which is a major departure from the House bill and one that is likely to complicate final negotiations between the two legislative bodies as they work to finalize reform by the end of 2017. Furthermore, the Senate draft eliminates all SALT deductions, while the House bill allows mortgage interest deductions and up to $10,000 in property tax payment deductions.
Watch KASB’s News Briefs and social media accounts for updates on the Senate bill.