Taxes are a big deal. The more I do the math, the more I believe that overhauling the entire way America is taxed is paramount to getting society and government on the right track. Public schooling is but one example.
Reforming our failed public school system is the civil rights fight of our era in America. The Teacher’s Unions have corrupted the entire public school system from the classroom to the top of every bureaucracy that administers the system. Public Teacher’s Unions have even poisoned local school boards.
American kids aren’t learning. In many cases, instead of objective learning taking place, children are being indoctrinated. Public school systems and the Teacher’s Union used COVID-19 as an excuse to force public schools to shut down. Many private schools didn’t shut down. America will be handicapped by having an entire generation that lost at least a year of learning if not more.
Look at it this way. When parents and schools are fighting over whether drag time story hour should or should not be included in a school curriculum, what does it mean for math, science, and English?
The result has been twofold. Americans are looking to send their children to private schools, and the school choice movement, led by people like Corey DeAngelis, is sweeping the country. States all over the country have enacted school voucher programs that bring choice and competition to the public school system. As Milton Friedman observed, when you are free to choose you have more freedom. Friedman was an early advocate for school choice and vouchers.
Are these vouchers that states issue to parents taxable?
When you read the current IRS tax code, the answer is very murky. It seems whenever you read any IRS code, it’s subject to a lot of interpretation and uncertainty. IRS Publication 525, Taxable and Non-Taxable Income, contains an exhaustive list of things that are treated as income and must be reported on the federal income tax return.
When you review the list of items that constitute “non-taxable income”, the following specifically relate to education:
· The ability to exclude from your income up to $5,250 of qualified employer-provided educational assistance.
· Parents can establish a Qualified tuition program (QTP) established and maintained by a state, an agency or instrumentality of a state, or an eligible educational institution. The earnings on the QTP will not be income to the student receiving them unless they exceed the cost paid for education expenses.
· A recipient of a scholarship or fellowship can exclude from income the tuition and fees and course-related expenses, such as fees, books, and equipment that are required for courses at the eligible educational institution.
The IRS said it would not require the recipients of special payments made by 22 states in 2022 to include those payments in their gross income. Of course, the IRS also goes on to say that “Other payments that may have been made by states are generally includable in income for federal income tax purposes.”
The answer is no one knows how the IRS will treat vouchers as they relate to the federal income tax code.
Since the tax code is not clear and the IRS has issued no guidance, we have to assume that the tax treatment of vouchers will become politicized. We further know that President Biden and the Democrats are in the back pockets of the Teacher’s Union. We also know that the Teacher’s Union fights vouchers and school choice every step of the way. Hence, it’s not a stretch to think that the Democrats will solidly be on the side of heavily taxing vouchers to try and get parents not to take them. This flies in the face of the empirically proven academic fact that school choice leads to better educational outcomes for children.
For evidence look at what is happening in states. Democratic lawmakers in Illinois, whose leadership sends their children to private schools combined with Democratic left-wing governor JB Pritzker, who sends his children to private schools, worked arm in arm with the Teacher’s Union to crush school choice for lower-income people. Expensive private schools are okay for their children, but they crush the opportunity for poor children.
They don’t care about data or the science of education. They also are hypocrites.
In states like Arkansas, Florida, Iowa, and Utah, school choice has been enacted with vigor and great fanfare. School Choice is popular. Tennessee’s governor got the message and is on the side of enacting some school choice. Unfortunately, the hopes and dreams of children in Texas for school choice was killed by misinformed rural Republican representatives. It turns out, the Teacher’s Union bought off rural Republican politicians. It’s not just in Texas but in other states as well.
A Becker Friedman Institute study on school choice finds large positive effects of Zones of Choice (ZOC) on student achievement and four-year college enrollment. Event-study estimates reveal that by the sixth year of the program, ZOC students’ English and language arts (ELA) exam performance improved by 0.16σ relative to comparable non-ZOC students. ZOC also raised four-year college enrollment by roughly 5 percentage points, a 25 percent increase from the baseline ZOC student mean, an effect mostly explained by increases in enrollment at California State University (CSU) campuses. Both of these effects lead to vast reductions in between-neighborhood inequality in educational outcomes.
Isn’t that the opportunity we want to give our children when it comes to education?
Voucher payments vary state by state as school choice sweeps the country. If you lived in Florida voucher payments could be as much as $8,000 per child. If the IRS rules unfavorably on taxing vouchers that means a family with three children would have to report an additional $24,000 of income and pay federal income taxes on that amount.
What would be another tax solution that would cut through the fog and treat everyone equally?
Scrap the entire murky and politicized IRS tax code. Instead, institute a Fair Tax. Under a consumption tax regime, payments made to private schools by parents are non-taxable. Payments to schools could be a combination of vouchers given to parents and from their total income, not after-tax income.
The Fair Tax returns power to the people and so do school vouchers. It takes power away from bureaucrats, unions, and politicians.
It has always been ironic to me that Democrats accuse everyone else of "systemic racism" while their own policies exemplify, condone and propagate it.
Poor kids, both minority and white, cannot go to private schools because of a lack of money. The teachers know that these kids would opt out in a heartbeat if they had the choice. So the teachers push with all their might to restrict this choice and keep these (literally) poor kids in failing environments and schools. You ask them "why?" and the teachers tell you that school choice takes money away from public schools. When you point out that public schools are already the highest funded schools in the country, they tell you that more is needed. When you ask how the money will be applied, you find out that it will go to teacher salaries, pensions and benefits. And then you've arrived at what "more money for public schools" really means.
This, to me, is true systemic racism.
For Democrats, feeling virtuous is far more valuable to them than actually being virtuous.
I love the fair tax. Our rulers will never allow it.