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How Upcoming Tax Reform Can Affect You

By Guest Post. Originally published at ValueWalk.

In the White House regulators are currently working to reduce tax rates by as much as possible. They recently put forth a general set of principles that they’re hoping will achieve this goal. Of course, with reduced tax rates comes the impact on public services, including education. Here’s how this reform can affect you as an educator.

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Tax Reform Educators
stevepb / Pixabay

The State And Local Taxes Deduction

This cut has been described as possibly the biggest threat to public school funding. Right now, it’s only in the planning stages, and it could eventually be amended or even scrapped for being too dramatic a cut. However, it’s something you should know about as an educator, as it could well happen.

The elimination of the state and local taxes deduction will cause a chain reaction which will affect funding. If it goes through, then state and local governments will be pressured to reduce the tax burden on individuals. If they do this, then this will lead to a significant loss of money that the public school system needs. This will be a problem particularly for states in the North-East, where per-pupil expenditures were particularly high.

Rough calculations show that if this comes to pass, we could see a drop of around 8.1% in public funding for schools. This can average out at a loss of around $48.9 billion.

Mortgage Interest Rate Deduction

“This doesn’t sound like it could affect education, but it can have of an effect than you’d think,” says educational expert Jack Moore from Boom Essays. “It can actually have a big impact on tax revenues for schools. This is because if this deduction is eliminated, it will have an impact on home sales and evaluations. Because of this, it could put buyers off moving to certain areas, and so reducing the tax that a local government can bring in for education. This proposed move shows that even seemingly unrelated changes can have a big impact on education and educators.”

Qualified Zone Academy Bonds

When put simply, these bonds use tax incentives to pay for construction and repairs at schools. They can be used in public schools, if the circumstances are right.

As President Trump was campaigning, he repeatedly claimed that he would improve school construction, emphasising how important it was. At time of writing though, his administration hasn’t put any plans forward as to how they’re going to do that. If these bonds are on the chopping block too, this could mean a decrease in needed construction in education.

Tuition Tax Credits

These tax credits are designed to help increase school choice, and will run counter to the tax streamlining initiatives as described above. Educational expert Paul Bennett from Essayroo says, “These tax credits are designed for people who support scholarships to private schools. It’s not one of the biggest changes being put forward, but it will be seen as a victory for our current government if they get it put through.”

The Classroom Expenses Deduction

In 2015, Congress added the classroom expense deduction, that allowed educators to claim up to $250 in deductions on their taxes, for items that they bought for work out of their own pocket. This was designed to be a permanent addition to law, but now it’s up for the chopping block alongside everything else on this list.

“This is because tax reform affects everything, whether it’s permanent or not,” says educational expert Andrea Flagg from Sociology Essay Help. “Reform shakes everything up, so a deduction you may have been relying on may soon be gone. The average teacher spends up to $600 of their own money every year in school supplies, so that deduction, while not extensive, did help. Now, though, it may not be there anymore.”

How To Counter Tax Reform Effects On Education

If these tax reforms come to pass, what will educators have to do in order to keep their schools running? If the money isn’t coming in from tax revenue, then they’ll have to focus more on private giving. Charitable donations are already used in schools, but these efforts may need to be raped up in order to meet funding needs.

However, the reforms are also looking to change the standard charitable deduction, which may put a lot of potential donors off giving. The changes may eliminate the deductions that givers may get, so they may decide not to as there will be less benefit to them. If this happens, then educators will need to find other ways of convincing donors that they should still get involved and give to their schools.

As you can see, if tax reform goes ahead, there will be a lot of changes that you’ll need to get to grips with. Be aware of them, and make plans if they do go ahead. You may need to change the way your schools are funded if they do go through.

By Mary Walton

The post How Upcoming Tax Reform Can Affect You appeared first on ValueWalk.

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