After years of pandemic disruptions in public schools, tumbling test scores and chronic absenteeism, the parental empowerment movement finally broke through the education establishment dam in 2023 with a historic school choice tidal wave.
Now, Congress is looking to press the advantage in 2024 by doubling tax savings for parents seeking options for their kids and limiting tax breaks for states that block school choice.
If the bill becomes law, states will have a clear choice: Empower parents or lose federal tax advantages.
It seems like an easy decision. Yet many states are blocking reforms that would make private, charter, religious and homeschool alternatives more accessible to families. Illinois recently killed their school choice program after a six-year run — the first state to fully roll back such a program.
A lawsuit brought by activists in Wisconsin sought to end the longest-running school choice program in the country. In Nebraska, a left-wing organization triggered a ballot initiative to repeal the recent expansion of school choice.
Even though nine Republican-led states now have universal school choice, there are currently 22 Republican trifectas — most notably Texas — that are ready for further expansion. On the other end of the scale, states run by Democrats are blocking expansion or mulling a rollback of current choice programs.
Introduced by Republican Missouri Rep. Eric Burlison in the House and GOP Utah Sen. Mike Lee in the Senate, the ACE Act will encourage states to remove barriers to additional learning options by expanding the list of K-12 expenses that families can fund with a 529 savings account and providing substantial tax incentives for states to embrace school choice policies.
A 529 savings account allows families to save for K-12 education tax-free at the federal level, as long as the money is spent on qualifying education expenses. The ACE Act would expand these allowable expenses to homeschooling costs, increase limits on withdrawal amounts and offer gift tax exclusions for 529 account contributions without getting double-taxed.
Families with students in public, private, religious, and at-home schools could spend the money they worked so hard to save on curriculum materials, books, online resources, tutoring, testing, therapies for students with disabilities and tuition.
The pandemic significantly disrupted children’s education, and one-size-fits-none education is not going to close it. The ACE Act gives families the control and flexibility needed to empower individual learners.
It also encourages more of a good thing, by incentivizing states to embrace more school choice policies and laws. Under the ACE Act, if states refuse to implement school choice programs and laws, they will lose tax exemption on municipal bonds.
These types of bonds are typically used for local projects (including school construction) and the interest earned on them is not currently taxed at the federal level. However, under the ACE Act, if states continue trapping students in failing schools, these federal tax perks will disappear.
They will vanish entirely for states with no school choice policies, and for states with some — but insufficient — school choice laws on the books, the federal government will offer a 50 percent tax break on municipal bond interest income as an incentive to keep taking steps in the right direction.
That’s no small loss. The interest income that state and local governments enjoy from the bonds adds up to about $380 billion over the next decade — a significant motivator for representatives to remove barriers to school choice.
We’ve come a long way to give students a fighting chance to find and fund a quality education. It wasn’t until 2017 that Republicans successfully opened 529 plans up to include K-12 costs.
Thanks to their persistence, families can now spend $10,000 per year in 529 account funds on primary and secondary school expenses. Under the ACE Act, this would double to $20,000.
As Sen. Lee has said, it is a “fundamental right” of parents to direct their children’s education. Passing the ACE Act is the obvious next step in making sure all children get the education that meets their individual needs—and that governments depriving them of that opportunity will pay the price for doing so.
Mimi Singleton is a Federal Affairs Director at the Foundation for Government Accountability.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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