On September 4, the House rejected, 213-188, legislation (H.R. 5208) that would have made permanent several education provisions included in last year’s tax cut package (P.L. 107-16) (see The Source, 6/8/01). The bill failed because it was considered under suspension of the rules, which requires a two-thirds majority for passage.
The legislation would have made permanent the increase in the amount that taxpayers may set aside annually for an education savings account. The tax cut law increased the contribution limits from $500 to $2,000 for education savings accounts and expanded the allowable education expenses to include elementary and secondary school costs. Contributions to the education savings accounts, as well as earnings on the accounts, are tax-free as long as they are used for education purposes.
The bill also would have made permanent the increase in the income phase-out for deductions on student loans and the exclusion from gross income of employer-provided educational assistance for undergraduate and graduate school.
H.R. 5208 would not have made permanent the $3,000 deduction for higher education expenses included in last year’s tax law, a provision set to expire in 2006.
Proponents of the legislation argued that millions of parents use education savings accounts to send their children to school. “I do not see how anybody can vote against helping parents send their kids to school and help make it permanent,” said Rep. Sam Johnson (R-TX) in support of the bill.
Rep. Lynn Woolsey (D-CA) disagreed. She said the bill “has one fatal flaw, and it must keep every Member of this Congress and in this body, every Member that supports public education from voting for it.” She explained, “H.R. 5203 takes much-needed federal funds away from public schools and gives that money to wealthy families to pay for private schools.”
Rep. Kenny Hulshof (R-MO), sponsor of the bill, countered that “70 percent of the tax savings just from education savings accounts go to families with children in public schools making less than $75,000 a year.” He added, “There are 14 million families whose children benefit from just the education savings account vehicle.”
“If you take a look at this bill,” responded Rep. Xavier Becerra (D-CA), “this is an attempt to sneak vouchers through the back door for private schools again, at the expense of the 90 percent of our kids who are attending public schools.”
