School Tax Breaks Get House Support as Democrats Object

The House of Representatives voted to expand and simplify tax breaks for education as Republicans continue to pass piecemeal tax bills while Congress is deadlocked on broader changes to the U.S. tax code.

The bill, passed 227-187 yesterday, would consolidate four education tax breaks into one credit and would remove a 2017 expiration date written into current law. It would cost the government $96.5 billion over a decade in forgone revenue.

“Streamlining the number of education provisions and retooling these that are most effective allows us to simplify the code and reduce some of the confusion that exists today,” said the bill’s sponsor, Republican Diane Black of Tennessee.

Republicans backed the bill by a 195-26 margin, while Democrats opposed it, 32-161.

The measure probably won’t advance in the Senate. The House plans to combine it with an expansion of the child tax credit that is scheduled for a vote today.

The tax votes continue a stalemate over tax policy that lawmakers don’t expect to resolve until at least 2015.

President Barack Obama opposes the education-credit legislation, though the administration didn’t threaten to veto it. The administration said in a statement that Obama would veto the child tax credit bill because it doesn’t extend breaks for low-income families.

Under the education proposal, four separate breaks would be replaced by a single tax credit with a maximum value of $2,500.

Tuition Breaks

A tuition deduction, an older version of the tuition credit and a credit targeted to adults who return to school would all be repealed. That last break, known as the lifetime learning credit, can be claimed for an unlimited number of years, compared with the four-year limit on the main benefit, known as the American Opportunity Tax Credit.

The opportunity credit would phase out for married couples with adjusted gross incomes exceeding $160,000, while couples with incomes exceeding $180,000 would be ineligible, the same as in current law. Single filers’ thresholds would be half those amounts.

Those thresholds and the size of the credit would be indexed to inflation after 2018.

Although the bill was originally cosponsored by Democrat Danny Davis of Illinois, Democrats objected to the repeal of some of the breaks.

“They deny assistance to many students across America who are assisted by our current law,” said Representative Lloyd Doggett, a Texas Democrat.

Groups representing colleges and universities, including the American Association of Universities and the American Council on Education, oppose the bill. They argue that eliminating the lifetime learning credit is unfair for students who may need more than four years to complete their education.

“The bill would negatively impact many low- and middle-income students and families who benefit under current law,” the groups wrote in a July 17 letter to lawmakers. “It also would harm graduate students and lifetime learners.”

The bill is H.R. 3393. The child credit bill is H.R. 4935.

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