Now that both the House and Senate have passed tax reform bills, Members of Congress from both chambers and both parties will go to conference to reconcile differences in the two bills. House Speaker Paul Ryan, House Minority Leader Nancy Pelosi, Senate Majority Leader Mitch McConnell, and Senate Minority Leader Chuck Schumer have named the 29 conferees to the committee. ACTE and Advance CTE recently sent a letter to the conference committee outlining our organizations’ opposition and concerns related to several provisions in one or both of the bills. Now is a great time to weigh in with your Members of Congress about concerns.
ACTE has previously reported on the House and Senate bills, but some details have since changed. Below are brief summaries of the bills’ provisions most relevant to CTE.
State and Local Tax (SALT) Deductions
Both the House and Senate bill eliminate state and local income and sales tax deductions. The bills also cap property tax deductions at $10,000. Eliminating some of the SALT deductions will put pressure on states and localities to lower their taxes. Since most education funding comes from state and local governments, a number of estimates have forecast large cuts to education funding as a result of changes to SALT deductions.
Educator Expenses Deduction
Educators can currently deduct up to $250 of out-of-pocket classroom expenses. The House bill eliminates the deduction entirely, while the Senate bill increases the maximum deduction to $500.
Student Loan Interest Tax Deductions
The House bill eliminates the tax deduction for student loan interest for low- and middle-class families and individuals. The Senate bill keeps the deduction.
Higher Education Tax Credit
The House bill eliminates the Lifetime Learning Credit (LCC) in favor of a modest change to the American Opportunity Tax Credit (AOTC). However, the change could harm students who choose to upskill for second or third careers and who have already used their AOTC, or who are working students and take more than five years to complete a program or degree. By contrast, the LCC has no time limit. The Senate bill does not change these programs.
Employer Education Assistance Programs
The House bill eliminates tax benefits for employer tuition reimbursement programs, which would increase the cost of upskilling the nation’s workforce. The Senate bill does not change this program.
529 College Savings Account Expansion
The House bill expands the use of 529 College Savings Accounts to cover expenses related to apprenticeships.
Overall Cost of Tax Reform
The bills are estimated to each cost roughly $1.5 trillion over 10 years. The unpaid spending in the bills would likely compel cuts to non-defense discretionary spending, including education and CTE, at a time when Perkins funding has declined by 13 percent over the past decade.
ACTE will continue to monitor and report on tax reform and its impact on CTE educators, students and funding. The bill that emerges from the conference committee will be sent back to each chamber for a final vote.
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