September 5, 2007
Contact: Nate Bailey (202) 464-5102
Emanuel-Camp-Bayh bill comes with good and bad tax policy
Washington, DC, September 5, 2007 - New bills in Congress would expand federal subsidies to higher education in a way that would likely help students little financially but would straighten out the current maze of federal subsidies, according to a new legislative analysis by the Tax Foundation.
"Any parent knows putting a child through college is a complicated and costly venture," said Gerald Prante, the study's author. "New legislation to simplify the college tax credits should get an ‘A' for helping make the process a bit simpler. Sadly, however, that simplification won't mean dramatically more relief for students."
In the new study, part of the Tax Foundation's Fiscal Fact series, Prante argues that the Emanuel-Camp-Bayh legislation does the most good by consolidating the three current provisions students and families can qualify for into one unified credit. The legislation would also bump the yearly tax relief cap up to $3,000 from the present $2,000 level. Prante notes, however, that this increase could be whittled away by colleges that choose to simply increase tuition in response to the increased tax relief offered to families.
The study also raises concerns about the expansion of the credit to include so-called "education related" costs. While such expenses, such as laptops, housing, transportation or supplies, could be properly utilized for school-related work, these credits could also easily be abused. In addition, receiving these credits would require additional paperwork and documentation, adding more complexity to the process instead of less, the bill's intended goal.
See Fiscal Fact No. 100, titled "Expand But Simplify? Education Credits Under Emanuel-Camp-Bayh," online at http://www.taxfoundation.org/publications/show/22583.html.
The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.