Education was mostly a sideshow in the massive tax overhaul Congress passed just before Christmas. But one marginal issue passed in the dead of night may end up playing a big role in the school choice debate going forward.
Under the new law, money from 529 college savings accounts can now be used for private elementary and secondary education expenses. 529s are savings accounts where you can put after-tax dollars earmarked for college expenses (and now elementary and secondary expenses) into an account where that money grows tax free.
That change was the result of a late-night amendment by Republican Texas Sen. Ted Cruz that only passed with Vice President Pence casting a tie breaking vote. The provision is lousy public policy and even many choice advocates opposed it, but it’s a big political win for proponents of education tax credits and using the tax code rather than direct spending to advance school choice.
Although proponents of school choice are frequently lumped together, there are actually lively and important policy differences around preferred strategies to expand choice. The role of government regulation is a particularly acute flashpoint. For some choice proponents, tax policy offers the advantage of side-stepping a variety of regulatory questions. Tax credits or accounts like 529s allow parents to spend money as they see fit without various rules about everything from student assessments to civil rights. In addition, tax proposals are an easier budget lift than direct government expenditures.
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