A Tax On Poor Schools
December 5, 2017
By Liam Kerr
Three years ago, the Lawrence Massachusetts’ public school district welcomed President Barack Obama’s Secretary of Education to celebrate the impressive gains made in this largely state-funded school system. Now, Paul Ryan, Mitch McConnell, and their brethren are working to put a new tax on funding schools in property-poor districts like Lawrence.
Over the last couple of weeks, Ryan et al. have proposed curbing the benefits of federal “SALT” deductions. SALT refers to “State and Local Taxes,” which taxpayers currently deduct from their federal tax liability. The proposed pullback has been dubbed the “Blue State Tax” because of the disproportionate impact it will have on higher-income, higher-tax states that tend to vote for Democrats. Such states understand that adequate taxation is required to fuel strong economies and government programs. Few states fit the bill better than Massachusetts.
Under the current House proposal, only the “S” is dropped completely – state income taxes would no longer be deductible. Taxpayers would still be able to deduct local property taxes up to $10,000 – a limit that will not lessen the benefit for most filers (in 2016, the average property tax bill for all but 20 of the state’s 351 cities and towns was below this threshold). But Massachusetts taxpayers will now be paying income taxes on money sent to the state, nearly 40% in the highest tax bracket.
If the GOP plan passes, the taxpayer will feel it – immediately. And anti-tax zealots, like ALEC, will not be far behind, using the federal change to push for another decrease in state taxes or at least holding the line on the current rate even if state budget challenges call for more funding.
Some may reason local communities can simply raise property taxes to back fill state cuts and under the House plan still get the “L” deduction as long as property taxes don’t rise above $10,000 a year. But just one of the problems with that line of reason is that poor communities like Lawrence simply can’t raise local property taxes to make up for state education losses. They don’t have the underlying property wealth do to it effectively.
In other words, the GOP tax reform plan sets in motion a series of policies that will drive statewide education funding down and worsen school finance inequity as well . . .
Read more here as published by WGBH News