We have a 529 education savings plan–one of those tax-advantaged plans that allow you to save money for your kids’ college, in many cases without having to pay tax on the earnings–for each of our three children. This week, we got a notice from the administrator of our plan that, due to the tax assault that Congress recently passed, starting this week, we could “take tax-free withdrawals up to $10,000 annually from their accounts for tuition expenses at public, private, or religious schools.”
That’s the Cruz Amendment at work. The amendment (See section 11032 of the tax bill.) allows parents to use 529 plans to pay for parochial or other private forms of k-12 education–or even homeschooling expenses. Forbes calls it “a big win for families,” and I don’t entirely disagree in the sense that it makes private school more affordable without really taking money out of the tax base. Of course, I live in a place where I’d be choosing private school because it’s less conservative than public school, which isn’t the typical scenario.
Hey kids, think about how much sweeter your academic success will be if you achieve it with even less support from adults?
But, taken in its context of the tax bill, the Cruz amendment isn’t good for families at all. Remember that the larger bill now prevents individuals from taking state and local deductions from their federal taxes. That means that the taxes that all of us pay for our local public schools are no longer deductible. Combine that with tax-free earnings on savings used to pay for k-12 private school and you start to evidence that Republicans aren’t here for “families” at all (But you knew this.) but rather for families wealthy enough to afford private school.
The shift from a tax preference for those supporting public school to those choosing private school is symbolic as well as practical. The less funding public schools get, the less attractive they are to parents, who now have more incentive to choose private options.