NCPA - National Center for Policy Analysis


February 20, 2009

Americans have always viewed education as the best ticket to the middle class and beyond.  In today's economy, Americans must increase their investment in education, just as major foreign competitors have done.

The current tax code includes preferential treatment for investments in physical capital, such as plant and equipment spending, but not for investments in human capital, such as education - even though both forms contribute to economic growth.

Under a universal education tax-deduction plan:

  • Taxpayers would be allowed an unlimited above-the-line deduction for qualified education expenses (tuition, etc.) for students attending primary, secondary, or post-secondary education, and tutoring expenses.
  • Taxpayers would be allowed a dollar-for-dollar tax deduction for all qualifying expenses.
  • However, given the exploding budget deficit, policymakers could offset redundant provisions in the current law, such as the Section 223 special deduction for teachers, the HOPE credit, and the Lifetime Learning credit, among others.

A universal education tax-deduction would simplify the tax code, provide neutral tax treatment for education expenses, make higher education more affordable and increase the level of federal education support without expanding federal bureaucracies, says Conda.

Source:  Cesar Conda, "Twelve Ideas for the Middle Class: Improve Education Tax Benefits," National Review, February 9, 2009.


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