One Tax-Cut Feature Is Especially Helpful
Has the impossible happened? Have the Clinton White House and the Republican Congress truly come up with a budget compromise that both sides believe will produce a balanced budget and allow tax cuts?
That’s the word out of Washington, D.C.
What makes it all possible, analysts say, is a vigorous economy that is generating surprisingly high tax collections.
Keep that point in mind.
One of the tax-cut elements being voted on this week in the House and Senate is a $1,500 annual tax credit for the first two years of a college education. That’s a credit, not a deduction. It comes off the top of your tax bill, dollar for dollar.
By extending this long-overdue relief to families with up to $100,000 in annual income, the White House and Congress have recognized the growing burden higher education imposes on middle-class families.
Some critics already have implied this tax break will affect only youngsters who would have gone to college anyway; it will just reduce the cost for them. It will not help needy students get an education that’s beyond their reach. Low-income families don’t have the income tax liability that makes the credit attractive in the first place, say the critics.
Clearly, it is important to provide for needy students with no other way to obtain a higher education. But several such programs, from Pell grants to the Americorps program, address that need.
It is middle-income families whose needs have habitually been overlooked when government has improved access to opportunities such as college.
As college and university fees and tuition have soared, all families except perhaps the truly wealthy have had to struggle. Discretionary spending has been reduced, depriving the economy of even greater vitality. Students themselves have taken longer to graduate, only to get, along with their diplomas, years of debt to pay off. And, yes, some kids didn’t go at all because of cost.
Of course, opportunistic colleges and universities could undermine the plan by raising tuition and thus intercepting the tax cut. Such temptations should be resisted.
As is, this proposal stands to benefit the economy two ways: It will return money to families who can spend it on other living expenses, and it will generate more college graduates more quickly, with their greater earning power unencumbered by student loan payments. That will help keep the economy robust so the dual goals of tax reduction and a balanced budget can continue to be a realistic part of the same package.
, DataTimes The following fields overflowed: CREDIT = Doug Floyd/For the editorial board