What the Tax Bill Means for Montanans: Tax Hikes And Reduced Services For Students

Shares

In order to pay for their budget-busting transfer of wealth to the richest few Americans (and a few multinational corporations), the Daines-Gianforte tax bill had to create some losers. One of the groups hardest hit will be those who simply want to improve their education, hurting millions of American families and the economy as a whole.

If you or a child needed to take out student loans to pay for college, the House tax proposal eliminates the modest deduction you were able to claim on those interest payments. 12 million Americans

In total, the House tax bill will reduce tax benefits and savings for all college students by $65 billion over the next decade, enough to pay for less than half of the estate tax reduction proposed for the same time period, a tax that currently affects fewer than 6,000 estates annually.
claimed this deduction in 2015. Full repeal of “the provision would mean that the cost of student loans for borrowers would increase by some $24 billion over the next decade.”

The news is even worse for graduate students.

The House version of the bill will devastate graduate education, imposing a massive tax increase on the graduate students who teach and do research in exchange for tuition waivers. As the New York Times reports, turning the tuition they receive into taxable income will make it impossible for many of these students to attend school:

It would make meeting living expenses nearly impossible, barring all but the wealthiest students from pursuing a Ph.D. The students who will be hit hardest — many of whom will almost certainly have to leave academia entirely — are those from communities that are already underrepresented in higher education.

The impact will not only be devastating for these students, but for American universities as well. The Washington Post notes:

The best international students would no doubt look to attend graduate school outside the United States, preventing the country from attracting and keeping future innovators. No doubt some of the best American students would leave, too.

Erin Rousseau, a Ph.D. Student at Harvard, explains that these cuts will ultimately harm the American economy, too:

Graduate students are part of the hidden work force that drives some of the most important scientific and sociological advancements in the country. The American public benefits from it. Every dollar of basic research funded by the National Institutes of Health, for example, leads to a $1.70 output from biotechnology industries. The N.I.H. reports that the average American life span has increased by 30 years, in part, because of a better understanding of human health. I’d say that’s a pretty good return on investment for United States taxpayers.

For workers seeking additional training to remain competitive in the global economy, the House bill also eliminates the ability for workers to attend classes and deduct those expenses. From Forbes:

Under current law, your employer can pay $5,250 to your educational institution on your behalf — or reimburse you for up to $5,250 of amounts you paid out of pocket — and that payment is not included in your taxable income under Section 127. The House bill would — you guessed it — remove the exclusion from the law.

In total, the House tax bill will reduce tax benefits and savings for all college students by $65 billion over the next decade, enough to pay for less than half of the estate tax reduction proposed for the same time period, a tax that currently affects fewer than 6,000 estates annually.

Perhaps that explains why Gianforte voted for the measure. Hitting the trifecta of doing harm to students, the US economy, and our education system seems to be exactly where his sweet spot lies.

And the impact doesn’t end with college students. Because both the House and Senate versions of the bill curtail the federal deduction for state taxes, it will make funds scarcer for public education. From the Chicago Tribune:

Advocates worry that states, counties and cities will have a tougher time raising money for schools – which get nearly all of of their money from state and local tax revenues – because those taxes will no longer be deductible.

Separately, the bill would bar school districts from using cost-effective, tax-free “advance refund bonds” to refinance school bond debt, a prohibition that could prove costly for districts looking to refinance to save money, according to John Musso, executive director of the Association of School Business Officials International.

This proposal will also increase the disparity in spending between the richest and poorest districts, as economist Nora Gordon notes:

The problem is that states depend more heavily on income taxes, and local governments on property taxes, so the compromise favors raising funds at the local level. Structuring it this way will only add to inequality in the school system.

And on a final, personal note, the House version of the bill supported by Greg Gianforte eliminates the meager $250 deduction for classroom supplies teachers purchase. While teachers spend, on average, $600 annually for classroom supplies, the deduction has always represented a small token appreciation for the expenses teachers incur as part of the profession.

This bill is bad for Montana schools, students, and teachers. Let  Greg Gianforte and Steve Daines know their personal tax cuts aren’t important than the education of Montanans just trying to improve their lives.

Others in the Gianforte-Daines Tax Bill Series:

If you appreciate an independent voice holding Montana politicians accountable and informing voters, and you can throw a few dollars a month our way, we\'d certainly appreciate it.
Tags

About the author

Don Pogreba

Don Pogreba is an eighteen-year teacher of English, former debate coach, and loyal, if often sad, fan of the San Diego Padres and Portland Timbers. He spends far too many hours of his life working at school and on his small business, Big Sky Debate.
His work has appeared in Politico and Rewire.
In the past few years, travel has become a priority, whether it's a road trip to some little town in Montana or a museum of culture in Ísafjörður, Iceland.

0 /* ]]> */