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Budget & Finance

Senate OKs Tax Bill Changing Teacher Deduction, Expanding School Choice

By Andrew Ujifusa — December 02, 2017 2 min read
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The U.S. Senate has passed its version of a tax overhaul package that contains potential changes for how teachers do their taxes and for state and local education funding, as well as a provision aimed at boosting school choice.

Senators passed the GOP-backed Tax Cuts and Jobs Act in the early hours of Saturday morning after extensive negotiations. It contains numerous changes to the current tax code with notable implications for K-12. The legislation approved by a 51-49 vote must now be reconciled with a House tax bill, which passed last month. And the legislation that results from those negotiations must get final approval from both House and Senate before being sent to President Donald Trump for his signature.

We went over key details of the Senate and House bills earlier this week. But the bills have grown more similar over the course of the week.

Both bills reduce the deductability of state and local taxes from individuals’ federal taxes. Thanks to a late amendment from Sen. Susan Collins, R-Maine, the Senate bill would still allow individuals to deduct up to $10,000 in state and local property taxes, while the House bill contains a similar provision for local property taxes.

Some education advocates say increasing the federal tax burden for those with relatively high state and local taxes could lead state and local leaders to cut their own taxes, and therefore reduce the revenues that support public schools.

Both the Senate and House bills also change 529 college savings plans to allow money in them to be used for various K-12 education expenses, including for private school tuition. Sen. Ted Cruz introduced a late amendment to the Senate bill to make this change, and his amendment was adopted 51-50 thanks to a tie-breaking vote from Vice President Mike Pence early Saturday morning. Although the change to 529 plans is designed to incentivize school choice, its exact impact (along with who might benefit most from such a change) is unclear.

One notable difference between the two bills concerns the current $250 deduction teachers can take for money they spend out of their own pocket on classroom supplies. While the Senate bill doubles that deduction to $500, the House bill would eliminate the deduction entirely.

Photo: Sen. Bob Corker, R-Tenn., center, confers with Sen. Ron Johnson, R-Wis., right, as Sen. Jeff Flake, R-Ariz., left, reads nearby during a committee hearing on Capitol Hill last month. The three senators have been pivotal players in the Senate’s debate over the GOP tax bill. (Pablo Martinez Monsivais/AP)

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