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Tax Bill Extras: A Win for Ted Cruz, a Loss for Orrin Hatch, DeVos Gets Mentioned

By Andrew Ujifusa — December 04, 2017 3 min read
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School choice got a boost when the Senate passed its tax reform bill early on Saturday morning. But what else went down that’s connected to K-12?

We’ve already gone over the key features of the tax legislation when it comes to education. Among other things, the Senate wants to double to $500 the deduction teachers can take for money they pay out of their own pockets for classroom supplies. And the deductions taxpayers can take for state income taxes would go away, a potential game-changer for education funding because it could put pressure on states to reduce their tax burden, and therefore the amount of money they can use to fund schools.

Lawmakers still need to go to conference to hash out the differences between the House and Senate tax bills before voting on that final versions on their respective chambers. We identified some key differences between the two bills last week, although overall the number of key differences between the two bills on K-12 has shrunk as the process has moved ahead. The GOP is hoping to have a tax bill signed by President Donald Trump by the end of the year.

There were a few interesting moments from that very long overnight debate you may have missed. Let’s review them.

The Ephemeral Amendment Favoring Religious Instruction

On Friday, an amendment from Sen. Orrin Hatch, R-Utah, was attached to the Tax Cuts and Jobs Act. This amendment would have allowed those paying tuition at qualified organizations providing religious instruction to treat 25 percent of that cost as a charitable donation, and therefore a deduction on their taxes.

By Saturday morning when the bill passed 51-49, however, that amendment was excluded from the bill. In fact, it was literally crossed out by lawmakers as they feverishly worked to finish the legislation:

At least 30 percent of the instructional time at those organizations would have had to have been devoted to religious teaching in order for parents paying the tuition to claim the benefit. In essence, it would have treated tuition payments to such organization as a tax-advantaged cost for some families, at least partially.

Hatch had offered an similar amendment earlier in the Senate’s consideration of the bill, but it took several days for that amendment to be included (and then taken out of) the tax bill. Sens. Cory Gardner, R-Colo., and Tim Scott, R-S.C., also proposed amendments to boost school choice in some form. Both of them were unsuccessful.

529 Plan Change

Late Friday night, Sen. Ted Cruz, R-Texas, proposed a successful amendment to the tax bill that would change 529 college savings plans. Cruz’s amendment would allow up to $10,000 annually in 529 plans to be used for K-12 expenses, including for private school tuition.

The House had already approved the same provision in its tax bill. So as GOP lawmakers in the two chambers get together and hash out a final bill, it looks all but certain that this change will be included in any tax bill lawmakers send to President Donald Trump.

U.S. Secretary of Education Betsy DeVos and other school choice supporters have applauded the move by creating a new form of tax-advantaged money parents can spend at the schools of their choice. But some are critical that using 529 plans to boost K-12 choice won’t do much to help low-income families.

The Link to DeVos

Speaking of DeVos, she didn’t have a vote on the GOP tax plan. But she came up during the final debate because of a private college in Michigan.

Hillsdale is a prominent institution of higher education among political conservatives, and has been for some time. DeVos’ brother, Erik Prince, attended Hillsdale, and the DeVos’ family foundation has provided financial support for Hillsdale.

A proposed amendment from Sen. Pat Toomey, R-Pa., would have exempted Hillsdale College from the bill’s tax on college and university endowments. Toomey argued on the Senate floor that because Hillsdale does not accept federally backed student financial aid, it should be rewarded by not getting taxed.

However, Sen. Jeff Merkley, D-Oregon, successfully proposed an amendment to strip out the tax break for Hillsdale. Merkley used the DeVos family’s financial support for the school as a way to attack Toomey’s proposal.

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