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Proposed Boost for Teachers' Tax Deduction Is Back, But Faces Long Odds

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Legislation under consideration in the House to alter the federal tax code would, among other things, double the deduction teachers can take for spending their own money on classroom supplies—but don't assume it will actually cross the finish line.

The Restoring Tax Fairness for States and Localities Act, which was favorably reported by the House Ways and Means Committee on Wednesday, would increase the deduction teachers can take on their federal taxes from $250 to $500 for spending money out of pocket on things like books, art supplies, and rewards for students. (See page 3 of the bill.) The bill, backed by Democrats, would make that change effective for the 2019 school year. The new, doubled deduction would begin in the 2019 tax year. But this bill will have a very hard time passing Congress. 

Here are some more details: Teachers and principals have frequently reported that they feel obligated to dip into their own wallets and purses to pay for what they see as important classroom and school expenses. In 2016, for example, a survey by Scholastic reported that teachers on average spent $530 of their own money annually on classroom needs; teachers in high-poverty schools specifically reported spending $672 on average. 

"I am proud that we are updating our tax code to help educators across this country ... who claimed education expense deductions in 2017," Rep. Terri Sewell, D-Ala., said during the hearing. 

Elsewhere, the bill would temporarily eliminate the cap on deductions—put in place by the 2017 tax changes—that federal taxpayers can make for their state and local tax payments. That was a big issue two years ago for schools and K-12 lobbyists on Capitol Hill as well; they argued that it would make it harder to raise revenues to increase spending on public schools. But supporters of the cap say that it's mostly the very wealthy who have benefitted from the previous state and local tax deductions, known as SALT. 

During the bill markup, Rep. Mike Thompson, D-Calif., quoted an Ohio schools superintendent when describing the cap on SALT deductions: "This issue is not a red state or a blue state issue. It's a public education issue."

The committee voted 24-17 to favorably report the bill. 

Ready for a trip down education policy memory lane? During the negotiations over the 2017 tax legislation, a House proposal would have nixed the $250 teacher tax deduction entirely, while a Senate pitch would have doubled it. (Both chambers were controlled by Republicans at the time.) Ultimately, lawmakers didn't change it

Don't bet the farm on President Donald Trump signing this new bill, however. As the Hill reported, there's a strong chance the GOP-controlled Senate will reject the overall bill because many Republican lawmakers support the SALT cap and would be unwillling to fundamentally alter a signature GOP victory under the Trump administration. A proposal to scrap SALT regulations put forward by Democrats earlier this year was voted down in the Senate

That may not be the whole story, however.

Clearly, lawmakers on both sides of the aisle are willing to at least publicly consider increasing the deduction. Continuing efforts on Capitol Hill to increase the deduction may pay dividends down the road. For example, that may be especially true if a Democrat wins the presidency in 2020 or 2024 and wants to throw a bone to the K-12 community that does not involve relatively far-fetched proposals such as tripling Title I funding.  

Chart on teachers' classroom expenses via a 2016 Scholastic report


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