Tax-Reform Plan Forcing Shift in Tax-Credit Rhetoric
Washington--President Reagan's new tax-reform plan presents "strategic problems" in selling a tuition-tax-credit bill this year, Undersecretary-designate of Education Gary L. Bauer acknowledged last week.
Despite the President's expected call this week for the elimination of numerous deductions and the lowering of income-tax rates, the Administration intends to send a tax-credit bill to the Congress, the Undersecretary-designate said, although it is unclear when. "You could probably name a half-dozen issues that the President is just committed to, and [tuition tax credits] is one of them," Mr. Bauer said in an interview.
In an attempt to reconcile tuition tax credits with broader Administration policy, Secretary of Education William J. Bennett reportedly plans to shift his rhetorical emphasis from parental "choice" and the need for competition for public schools--themes he has stressed--to the need for "tax fairness."
According to an Administration official who asked not to be named, Mr. Bennett will argue that tax credits for parents who send their children to private and religious schools would foster "tax equity."
But a Republican Senate aide said last week that "that argument did not succeed for them last time" when the Senate killed the measure in 1983, and that he does not expect it to be any more persuasive this year.
A Familiar Bill
The Treasury Department is currently drafting the tax-credit bill, according to Mr. Bauer, who is now Deputy Undersecretary for Planning, Budget, and Evaluation.
In March, Mr. Bennett testified that a tax-credit bill would be forthcoming within a few weeks. Mr. Bauer was reported by education-association sources to have said recently that one of the reasons for the delay in introducing a bill has been the need to develop a clear rationale for the credits while the Administration pursues "tax simplification."
In Congressional testimony earlier this year, Mr. Bauer said the new bill would probably be identical to the measure that was killed in the 98th Congress. It provided a tax credit of up to $300 per year for parents whose children attend private or parochial school. Parents with incomes of up to $40,000 would have been eligible for the full credit; those with incomes up to $60,000 could get a partial credit, and those with incomes above $60,000 would have been ineligible.
Mr. Bennett has also been pressed to explain the apparent conflict between cutting education spending for the poor and handicapped in the name of austerity, while advocating the costly new subsidy of tuition tax credits.
Allowing parents the tax credit would cost at least $359 million next year and nearly $1 billion a year within five years, according to Treasury Department estimates.
"Does choice have the same priority of an immigrant child trying to get a basic education?" asked Senator Lawton B. Chiles, Democrat of Florida, at an appropriations hearing last month.
"They're both important" and®MDSU¯ ®MDNM¯both objectives must be balanced, responded the Secretary.
Now, "What we would say is that we're committed to tax fairness and that this is a fairness issue," the Administration official said last week.
According to the official, Mr. Bennett will argue that tuition-tax credits would end the "double burden" of parents whose taxes support public schools and who pay to send their children to private or parochial schools; he will also stress that credits are directed at families with incomes below $60,000.
"Make no mistake," President Reagan told the National Association of Independent Schools earlier this year, "Secretary Bennett and I intend to see [tax credits and education vouchers] through to their enactment."
Mr. Reagan and Mr. Bennett have each argued that issues of parental choice and equity are related. Tax credits "would be only fair," the President said in his nais speech, since parents with children in private schools are "paying their full share of taxes to support our public schools." (See Education Week, March 6, 1985.)
Meanwhile, opponents of tax credits are gearing up for another fight, said Arnold F. Fege, director of governmental relations for the National Congress of Parents and Teachers.
Anticipating that a tax-credit proposal might be part of the Administration's tax-overhaul plan, Mr. Fege said his group had their press releases printed and members ready to mobilize to oppose it.
John Martin, director of federal-state relations with the Council of Chief State School Officers and an opponent of tuition tax credits, said the Congressional and Administration efforts to pursue tax simplification will make the tax-credit idea easier to defeat.
An Education Department official, however, contended that the "philosophical ground" on the question of choice "is shifting in favor of the Administration's position" and that Mr. Bennett will continue to press for tax credits, vouchers, and other measures designed to promote parental choice.
Tax Plan's Provisions
The President's new tax plan, a revised version of the one published last fall, has been awaited nervously by officials in both public and private education. (See Education Week, March 20, 1985.)
The American Federation of Teachers and the Council of Chief State School Officers, among others, have strongly opposed a proposal to end deductions for state and local taxes. If passed, this measure would put pressure on localities to cut taxes and thus spending on education, they claim.
Dropped from the revised version of the tax plan, according to press reports, was a provision to end tax deductions for charitable contributions. Eliminating this deduction would have been a "disaster" for private schools, said Richard F. Barter, president of the nais and headmaster of the Collegiate School in New York City.