A GOP tax ‘break’ not a break at all

What were they thinking, these Republicans who included in their tax reform package some changes that will do away with some tax deductions and credits applying to the expense of higher education? That’s an expense, by the way, that has grown tremendously in the private and public sectors.

But what helps some people – millions of people, actually – afford it is things like tax deductions for student-loan interest payments. And private schools can avoid taxes on some of their investments and can use tax-free bonds for some construction projects.

But in the name of lowering corporate taxes and personal income taxes, Republicans are putting more of a burden on students, something Duke University Vice President Michael Schoenfeld calls “a tax on advancement or a tax on education.” Those deductions and tax-free bonds and the like are under threat with Republican “reform.”

It’s not a smart thing to do, and it may be that enough pressure will be brought to bear to change up the GOP plan. But millions of people, literally, would be adversely affected by the proposed changes.

In fact, there are 23 million Americans in the process of repaying $2.1 trillion in federal student loans. Overall, something like 44 million Americans are repaying student loans of some kind.

What happens if these people get “reformed” out of deductions that help them? They might default, or they might be saddled with debt that just won’t go away as they have to pay more money back.

And that money, by the way, helped them go to college to earn degrees that enable them to get good jobs and become taxpayers. That thus bolsters the overall economy, making them consumers.

Rep. David Price, a Chapel Hill Democrat and 4th District congressman, proposed the student loan deductions 20 years ago. Said he of the part of the GOP reform that affects the deductions: “Instead of using this deduction to offset tax cuts for millionaires while student debt is at an all-time high, we should be maintaining critical relief for American families.”

The Internal Revenue Service says more than 12 million individuals used the student loan interest deduction in 2015.

And here’s another hit for ambitious people trying to improve their lives with education: the “reform” ends the “Lifetime Learning Credit,” which gives a tax break to people for up to 20 percent of the cost of post-secondary education. A lot of those affected are people who are working and going to school part time in order to bolster their credentials. Again, this is something that helps the overall economy.

Republicans answer critics of their tax reform, which will add $1.5 trillion to the federal budget deficit over 10 years, by saying some programs have to be cut in order to provide tax relief for everyone. That sounds logical – if the goal, the one and only goal, is to give people a politically popular tax break. But the goals of Congress and the president are, historically anyway, supposed to be about much more than that.

This story was originally published November 7, 2017 at 10:15 AM with the headline "A GOP tax ‘break’ not a break at all."