December 27, 2017

The 529 Expansion

By Bellwether

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The new tax bill will expand 529s to cover K-12 education (yes there was already a K-12 tax break for private schools but it didn’t benefit the really wealthy). At best this seems like a distraction, at worst it could skew the school choice debate even though tax policy isn’t a very good way to give low-income parents more choice.

I look at all that today in U.S. News & World Report:

Education was mostly a sideshow in the massive tax overhaul Congress passed just before Christmas. But one marginal issue passed in the dead of night may end up playing a big role in the school choice debate going forward.

Under the new law, money from 529 college savings accounts can now be used for private elementary and secondary education expenses. 529s are savings accounts where you can put after-tax dollars earmarked for college expenses (and now elementary and secondary expenses) into an account where that money grows tax free.

That change was the result of a late-night amendment by Republican Texas Sen. Ted Cruz that only passed with Vice President Pence casting a tie breaking vote. The provision is lousy public policy and even many choice advocates opposed it, but it’s a big political win for proponents of education tax credits and using the tax code rather than direct spending to advance school choice…

You can read the entire thing here. Maybe this is trickle down school choice? Argue that case or tweet me your tax break ideas @arotherham.

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