November 14, 2017
By Dr. Larry Feinsod
The House of Representatives may vote on legislation to restructure the federal income tax system as early as this week. That’s terrible news for New Jersey’s public school students, communities, and taxpayers.
As now written, H.R. 1, “The Tax Cuts and Jobs Act” (TCJA), would limit deductibility of state and local taxes, eliminate advance refunding of construction bonds (a process that provides savings to school districts and taxpayers), and encourage the diversion of limited federal education funds from public to non-public schools.
On Monday, I sent a letter to members of New Jersey’s Congressional delegation, urging them to oppose the legislation. I advise local school board members to do the same.
Here are some points to share with our representatives in Washington:
- A recent analysis of H.R. 1 found that the plan would result in a growing tax burden for middle-class suburban households in the New Jersey districts. In the first year of implementation, the immediate net tax increases in the five New Jersey Congressional districts analyzed would range could amount to $5,846 for married couples with two children filing joint returns.
- According to the Government Finance Officers Association, the consequences of eliminating the state and local tax deduction would affect all aspects of American society, but would be felt most harshly by public school districts which must rely on local and state tax revenue for support.
- This issue is especially critical in New Jersey where the federal government provides only 4.2 percent of the funding for public education, making the state’s public schools the second most dependent in the nation on state and local revenue, according to data from the National Education Association. In addition, a Rockefeller Institute report shows that New Jerseyans pay $31 billion more in federal income taxes than the state receives back in federal services. H.R. 1 will only worsen the financial situation for our state’s public schools and its citizens.
- H.R. 1 would eliminate the advance refunding of bonds, which allows school districts and other governmental entities to refinance at lower interest and lower cost to taxpayers. Information provided by the National School Boards Association shows that 271 New Jersey school districts and other governmental entities used this process between 2012 and 2016.
- In addition, the legislation would expand tax-advantaged education savings accounts to allow contributions for non-public school tuition totaling up to $10,000 annually. The New Jersey School Boards Association supports school choice within the public sector. However, we oppose the diversion of public funds for private education. According to the National School Boards Association, the proposed expansion would “drain resources from our public school districts and thereby impact innovative education programs that are helping to raise student achievement.”
This is not progress. It’s regression. And it will hurt our state.
Representatives of New Jersey’s business community and local government have joined in opposition to H.R. 1. It’s important that our Congressional representatives also hear the concerns of local school officials. We represent a constituency far too important to be ignored.
(NJSBA has prepared a sample resolution on this issue, which local school boards may adopt as us or modify.)
These are my Reflections. I look forward to hearing yours. Follow me on Twitter: @DrLarryFeinsod