Tired of waiting on the Senate's GOP leadership to reinstate expired tax breaks, the Finance Committee's ranking Democrat, Max Baucus, has Introduced his own package of education tax incentives.
The Montana lawmaker's Education Competitiveness Act of 2006 includes a tax section that creates, expands, modifies or extends various tax breaks for education-related expenses.
Specific provisions for individuals would:
- Allow taxpayers who do not itemize to take an additional standard deduction for state and local property taxes used to fund public education. Single filers would add $500 and joint return taxpayers would add $1,000 to the existing standard deduction amounts they can claim.
- Combine the Hope Scholarship and Lifetime Learning tax credits into a single tax credit of up to $2,000 to pay for tuition and other education-related expenses.
- Increase the repayment period of a loan taken from a retirement account to pay for higher-education costs from five years to 10 years.
- Allow workers to exclude from their gross income up to $7,000 a year in education assistance that they receive from their employers.
- Create a Young Savers Account program, under which an adult could establish and contribute to a Roth IRA for children age 21 or younger. The contributions would count toward the parents' annual Roth contribution limits and the account would become the child's Roth IRA when the youth turned 22.
- Increase to $500 (from the previous $250 write-off that expired Dec. 31, 2005) the deduction that educators could claim for out-of-pocket purchases of classroom supplies.
- Increase the deduction for annual student loan interest from the current $2,500 limit to $3,000.
On the business-tax side, companies that assemble computers and publishers would be able to take an enhanced deduction for charitable contributions for educational purposes.
Baucus' new tax and education bill comes on the heels of his repeated attempts to get the Senate to take up and pass a collection of tax extenders, those tax breaks such as the educators expenses, tuition and fees deduction, state sales tax deduction and the corporate write-off for research and development expenses, that expired at the end of last year.
The Montana Democrat's efforts in this regard have been stymied by Senate Majority Leader Bill Frist, R-Tenn. You can read more about the political machinations surrounding these tax breaks in my earlier blog postings here, here and here on the matter.