The latest GOP Tax Plan offers a generous break for wealthy families that send their children to private schools, worth up to $30,000 a year in tuition.
What happened to the middle class? Forgot about them. This tax break will cost taxpayers up to $600 Million.
“That number is the potential net new tax savings, under the House tax plan, for parents who deposit a large amount of money when their kids are born. They would get that benefit by using the money for children starting private school in kindergarten and attending through high school.
“Buried in Section 1202 of the tax bill are a number of proposals to consolidate and simplify various tax breaks for education savings. Part of the section in effect would neuter something called a Coverdell account, which families have used for years to save for both private school and college….
“But then comes the big change: Elementary and high school expenses of up to $10,000 per year would become “qualified” expenses for 529 plans. Translation? You could pull $10,000 each year out of your 529 account for private school and avoid paying taxes on any previous growth. There are no income limits on who can use 529 plans, and you would be able to keep right on saving for college as well….
“Now, a quick 529 refresher. You put money in, and in 35 states you get some sort of tax break when you do so, according to Andrea Feirstein, a plan consultant. The money grows tax free, and when you withdraw it to pay for higher-education expenses, you pay no taxes, capital gains or otherwise.
“So what would it mean to add private school benefits to 529 plans? Take a wealthy family in the highest tax bracket. It has a newborn baby, and through some combination of gifts and its own savings, it opens a 529 plan with $200,000 and never deposits another dime.
“If the money grows at 6 percent annually, that family could take out the $10,000 each year, avoiding $2,380 in taxes annually. If it did that for 13 years (kindergarten through 12th grade), it would save $30,940 in taxes. Plus, according to numbers that Vanguard ran for me, it would still have enough left over after high school ($370,717) to pay for many pricey private colleges in full, as long as tuition inflation there ran no more than 3 percent annually.”
Diane Ravitch's blog 
Very SICK! Thank you, Diane.
And A VERY Happy Belated Birthday wish to YOU!
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Can’t open link. Thought you should know. Maybe others are having trouble, too.
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I sent this information, along with my very negative comments, to Senator Todd Young (R) Indiana. This tax bill is pure crap, designed to help the wealthy.
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The 529s are another tax reducing strategy for the wealthy. Most working people do not have enough disposable income to benefit from this tax break.
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The only people that can afford to save that kind of money are people who don’t have to worry about money in the first place because they earn above average and way above the poverty level by a massive margin. This means those who struggle the hardest to make ends meet will struggle harder while life for the rich gets even easier so they can buy more designer clothing, take more high priced vacations, and buy larger yachts.
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I was reading an article in People magazine about an island that is secluded and wealthy people go there to relax. One cocktail was $500. [I read this at a friend’s house.]
Wealthy people definitely need more tax breaks which then necessitates a cut in funding for Medicare and Medicaid. Can’t have money for the wealthy and still fund needed services. This is a priority for the GOP.
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I think it is a safe bet that if you are flying first class, you don’t have to worry about being kicked off an overcrowded flight as long as you paid full price for that first class ticket.
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I was listening to Fareed Zakaria this morning on CNN while driving, and he did a quick analysis of the GOP budget.
Find his clip if you can. He says this is wholly unlike Reagan’s redo of the tax structure, which was bipartisan and budget-neutral and actually eliminated loopholes.
The Trump budget will add at least $1.5 Trillion to the budget and is stuffed with goodies for the wealthiest, especially hedge fund managers.
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The 529 program was a strong incentive for for families that can afford $5000 per child per year to save money towards college, but it encourages savers to choose from a number of investment funds so the money can grow. In other words, it was a way to ensure money is invested at-risk on Wall Street.
The new proposal adds to this saving for private school, beginning at inception, which is a nod to the pro-life movement. So this is a massive transfer of money onto Wall Street, but also a re-prioritization to give new tax advantages to private school parents who tend to be more affluent, rather than basing it on income.
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The US is creeping towards an Australian-style government-supported private school system with these proposals. Don’t do it, America!
http://theconversation.com/yes-some-australian-private-schools-are-overfunded-heres-why-66212
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I befriended an Australian who came to the USA as a coach for the Aussie Program, about a decade or so ago. Our new contract was up for a vote by the rank and file and, like you, he was cautioning that, should we ratify it, we’d end up following the path that Australia’s unions had chosen.
Thanks for the words.
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My chapter leader sent out this link for a “Have You Heard?” podcast entitled “What We Talk About When We Talk About the Corporate Education Agenda”.
It’s excellent. I encourage anybody and everyone to listen to it and then pass it on to friends and colleagues.
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“the legislation includes a victory for school choice advocates: It would allow families to use up to $10,000 in savings from 529 college savings plans for K-12 expenses, including private school tuition. It puts an end to the so-called Coverdell Accounts, tax-free accounts which families currently can use to cover up to $2,000 of K-12 costs, including private school tuition, in favor of the 529 change. Families could also use 529s to cover the cost of apprenticeships and could open an account when a child in utero”. Jay P Greene has been pushing “ESAs” from the U. of Arkansas … does this kind of legislation meet the Jay P Greene standard?
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