Via Diane Ravitch, this post by Jeff Bryant lays out how the GOP tax bill will cripple public education, which is the crown jewel of Massachusetts’ quality of life.
Both the Senate and House bills propose an excise tax on private college endowments with assets of more than $100,000 per student. Endowment funds are used to help pay for academic programs, campus facilities, and student services, private college leaders and advocates say.
The biggest threats to local schools in both plans are their proposals to end federal deductions for state and local taxes (SALT) that households take when they itemize. The House plan limits the pain with a $10,000 ceiling,
but the Senate plan does away with the deduction altogether.[This is apparently back in the Senate bill.]Any reduction to the SALT federal subsidy will imperil the largest sources of school funding to education by eliminating the federal tax benefit to schools, discouraging new state and local tax initiatives to support schools, and pressuring state and local officials to cut local taxes to appease tax payers who can no longer deduct those taxes from their federal returns.
Another feature of the House bill that the Senate also proposes would increase how much schools pay for long-term debt by eliminating a tax exemption school districts get when they refinance their debts at lower interest rates using certain types of bonds.
According to Education Week, in the most recent year reported, districts carried $409 billion in long-term debt – a rate of $8,465 per student – and paid $17 billion in interest on those loans. Taking away any ability to write off some of that interest as a tax exemption would decrease money districts have to pay for teachers and student learning opportunities.
This is the federal government coming in and crushing us, on behalf of billionaires and no one else. The US Congress is “going Galt.”
This is interesting because the Republicans don’t really seem sure that eliminating the SALT deduction will have the effect you are afraid of. But if it does then it makes even more sense for them to do it, because it will lead to the election of more Republicans in the Democratic monopoly states like Massachusetts and California.
I take issue with public primary school education being some sort of crown jewel in Massachusetts. School is a chore. It’s very important to public employees that their cadillac health care plans continue to be paid for by the state, cities and towns. At least in Boston where I live, that is where every dollar increase in the school budget has gone for the past 20 years.
If you really believed in the centrality of paying for government in Massachusetts residents’ lives, then they should be happy to keep paying high taxes and electing Democrats to do it. I just don’t see the justification for the federal government to subsidize it.
Public schools overall do very well here. I saw a map once where each state was labelled not with its own name, but the name of the country it is most comparable to in terms of education quality. I forget exactly which country MA got, but it and other New England states were Scandanavian countries IIRC, while other states, particularly the South, had third world names. Our rankings vis-à-vis other nations as a state are near the top unlike those of the US as a whole which are embarrassing for a country supposedly number one in everything.
The new nesting feature needs fixing, but it may look like Finland in Winchester but it’s Alabama in Roxbury and Mississippi in New Bedford and Lawrence. We are awesome on aggregate, but the disparities between inner cities and suburbs on education are a stark indictment of how racially and economically divided our state remains.
You can find that map here:
https://education.good.is/articles/educational-state-map-international
And, yes, we’re Norway.
What is most concerning is the funding disparities that already exist among our districts (I’d disagree, otherwise, on the below) due to lack of reconsideration of the foundation budget.
Tracy, thanks for weighing in. I’d love a longer primer on foundation budget stuff here sometime, if you have the chance.
Oh, sure! I could do that.
For those looking for a quick “how does this tax bill hit K-12 schools” (and don’t mind my linking to my own blog), I just put up a post: https://who-cester.blogspot.com/2017/12/how-tax-bill-hurts-school-budgets.html
There are at least two major problems with our current Foundation Budget system:
1) The Foundation Budget, which is supposed to represent a base level of education funding, likely no longer represents that, as evidenced by the fact that so many communities that can afford to are spending far above the foundation (some communities spend 2x the Foundation). That leaves a raging question in a supposedly liberal state – how far forward should wealthy communities be able to move from poor communities in terms of educational quality and offerings?
2) The Foundation Budget allocates additional funds to communities to mitigate the impacts of both poverty and ESL, but I don’t think there is any empirical evidence that has evaluated this additional money. If the goal is to spend enough money on each child to satisfy their educational needs, the additional funding is pretty clearly inadequate given the wide disparity in performance between rich and poor districts. The questions – perhaps unsolvable – are, “what is the minimum level a student should be educated to”, “how much does it take to educate a student with social handicaps to that level”, and “are we willing to make that financial commitment”?
We have the best public schools in America. Yes people should be absolutely overjoyed to pay for that kind of public resource. It attracts and keeps talented people from all over the world to contribute to our culture and economy, and provides good quality of life for those who graduate from our schools.
I’m just kind of surprised that even needs to be said.
And no, you shouldn’t be taxed twice on the same income. Also makes perfect sense. Bizarre to see “conservatives” argue otherwise — oh no, actually you should pay more in taxes.
Like I said in my own post, it never ceases to amaze me that there is no popular outrage against military contractors, medical companies, tax preparers or real estate interests who bilk the government billions more than the “greedy blacks and immigrants on welfare” or those “greedy unionized teachers”.
I remember Fox had some segment attacking teachers who made 78,000 a year aka nearly a hundredth of what that one network paid to silence O’Reilly and Ailes victims. Let alone the billions and billions of dollars going down the drain to the likes of Davita, the Trumps, or Lockheed and Boeing.
Keep saying it. Never stop.
I’m ok with taxing endowments and have long called to end their tax exempt status locally for this reason. Right now the universities hoard or invest in capital projects. They outsource too many teaching positions to adjuncts and have worked with the Trump Administrstion Labor Department to crush graduate student unionization efforts. A modest tax on endowment wouldn’t be a bad thing, nor would ending tax exemptions for property or donations.
I’m not saying absolutely not to your ideas, but the theory is that they as non-profits benefit the community in other ways.
It would have been helpful if the Minority Leader and other Democrats had branded this an education tax before it came up for a vote.
Not just Jeff Bryant and not after the fact.