Republican “Tax Reform”: Students and teachers, you are not worth much

There has rightly been much concern over the proposed Senate and House “Tax Reform” packages which contain enormous permanent giveaways to the very wealthy and large corporations, while about a third of middle-class families will eventually see their taxes increase. The House passed its bill, and the Senate has been trying to rush its bill to a vote amidst dissent from all Democratic and some Republican senators.

New Jerseyans and others from high tax states have spoken out against the nasty impact to us taxpayers with Congress’s plan to end our federal tax deduction on NJ state and local taxes (SALT), which includes our property taxes. Less attention has been paid to the devastating impact to education in our state. The entire bill is a trickle down scam and nothing is trickling down to schools. The Republicans are trying to achieve savings on the backs of students, teachers, schools and universities.

One of the largest deductions that Speaker Ryan and his colleagues changed – the state and local tax deduction (SALT) – will raise taxes on far more households. Most of NJ school funding comes from the local property tax – almost all exclusively for wealthy communities, but in poorer districts the State and federal funds supplement the cost. With New Jerseyans no longer getting this State/local tax deduction there will be pressure for lower property taxes at the very moment many localities will need an increase to cover their costs, and the State will need to find new sources to increase its contribution. A no-win proposition.

In addition under the Ryan plan gone is the write-off teachers can use to deduct up to $250 for school supplies that they purchase for their classroom. Also out is the student loan interest deduction that allows those paying off their loans to deduct up to $2,500 under the American Opportunity Act. Apparently these tax gurus just don’t think that teachers and students are worth it.

<<November 29, 2017: We have been advised by a Gottheimer staffer that what Rep. Gottheimer said in his blog post, and I quoted below, was not actually written by him. The comments in the blog should have been attributed to another source, and the comments have been removed from the blog. Their error is regrettable, but the comments are spot on. – Bill Orr >>

As an unidentified source explains, As Representative Josh Gottheimer (D-CD 5) explains,
“The Ryan/McConnell tax plan earns a failing grade when it comes to students and teachers. The bill eliminates several deductions and exclusions that help students pay for their college educations, and, inexplicably, eliminates the above-the-line deduction for teachers’ out-of-pocket expenses. In addition, under the guise of simplification, the plan would eliminate $17.3 billion nationally in tax relief from the American Opportunity Tax Credit. At the same time, changes to the SALT deduction and 529 education savings plans [designed to encourage saving for future college costs] could hurt K-12 public schools.

The change in the deduction will mean that local governments are likely to receive less state support for schools, libraries, and other services. Furthermore, the bill rewards wealthy families with a tax benefit for taking their children out of public schools and sending them to private schools – which many in poorer communities cannot afford – all part of Secretary DeVos’s “school choice” (read, voucher) agenda.

Finally the bill would also impose a new 1.4 percent tax on the investment income on certain university endowments which helps cover schools’ operating budgets and financial aid. Not only are these purposes charitable, but taxing them will put even more upward pressure on students’ tuition and fees.”

Likely motto of Republicans celebrating their passage of the tax bill: “STARVE THE BEAST – HURT THE SCHOOLS.

This Republican disregard toward something as basic and important as education is worthy of protest from all quarters. As it now stands if the Senate passes its “tax Reform” bill, which is different from the House bill, Republicans would have to reconcile their two versions, a complicated task because each bill contains compromises that leaders added to shore up support in their own chamber that would pose problems in the other chamber. The Senate is expected to vote on the Motion to Proceed (a pre-vote vote) as early as Wednesday, and they could take a final vote as early as Friday. Although our Democratic US senators oppose the bill, remind them how important it is to prevent this tax scam. Both bills contain SALT’s deleterious provisions.

Our Republican representatives in particular should be told in no uncertain terms that during any reconciliation process they must oppose the “Tax Reform” SALT provisions and work to have them deep-sixed. As Indivisible points out, the only reason defeating this bill is remotely possible is because of you with your constituent pressure. 

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