My wife teaches music in Iowa’s most urban school district. She is assigned to ten different schools where she often teaches in closets, cafeterias, and hallways. Each year in April she pulls out an envelope with crumpled up receipts for music books, clarinet reeds, and school supplies that she buys for her students (OK, she gives me the envelope in January and I don’t do anything with it until April). It always adds up to more than $250, but $250 is what we’re allowed to deduct on our taxes, so that’s what we do. On average, teachers in high-poverty schools spend an average of $672 on classroom items.
Several years ago my father, a banker, was helping me with my taxes and he saw the receipts that my wife and I had collected for school supplies. He was astounded. “You don’t get reimbursed when you buy school supplies?” It baffled him that schools didn’t supply the types of things that we had to buy for our classrooms. So, it has been nice to take advantage of the $250 tax credit each year.
The new House of Representatives tax plan eliminates the $250 tax credit for teacher supplies. At first glance, one might say, “Well, everyone has to bite the bullet a little bit.” Yeah, well, not everyone is going to have to tighten their belts with this new tax plan. The Institute on Taxation and Economic Policy has calculated that Iowans making $1.2 million or more will see a tax cut of $36,100, which will amount to roughly 46 times more than what I might hope to see in 2018. Their analysis also shows that by 2027 the top 1% of Iowans will get 143 times the tax break that I will get.
It’s interesting to note who loses in the Republican House tax plan. Anyone with student loans loses. Currently anyone with student loans can deduct $2,500 in interest payments. The House tax plan would stick student loan borrowers with a tax increase of $625 a year. If you are a graduate student you lose. The House tax plan now taxes tuition waivers as income. In many cases that means that graduate students will owe taxes on tens of thousands of dollars in tuition benefits. Of course there are lots of other losers, those with long-term illnesses, families who adopt, and people who live in states with higher income taxes. There are a lot of losers. Of course we all lose because this tax package will cost an estimated $1.5 trillion over 10 years, resulting in less investment in public schools, public safety, infrastructure, and scientific research.
So, who wins with this tax plan? We all know the answer to that. Rich people win. President Trump’s children would get an extra $1.2 billion, due to the elimination of the estate tax, which will cost the rest of us $172 billion in the first ten years of the tax plan. The tax rate for mega-businesses would go from 35 percent to 20 percent, so they win. Let’s be honest, people who already have a lot of money will have more money. But, hey, history tell us that money will “trickle down” to the rest of us right? Right?
So, in the end my wife is no longer to deduct the money she spends to buy clarinet reeds for her students who can’t afford them, but Donald Trump, Jr. will have an extra $1.2 billion to spend on hair gel. That’s what’s good for America right?