US Bishops News: Potential Tax Policy Changes and K-12 Catholic Education

Potential Tax Policy Changes & Catholic K-12 Education

In the ongoing discussions in Congress about reforming the U.S. Tax Code, Catholic K-12 education could be directly impacted. While not seemingly the direct target of these changes, the disruption to innovative schooling models and current benefit structures for staff and their families could be enormous. This special edition of CE News is meant to inform you of the potential changes and to equip you to advocate directly to your Representatives and Senators.

We have drafted a form letter you may use to contact them – please register for our Voter Voice system and send a message here.

Exclusion for Qualified Tuition Reduction

Section 117 of the Tax Code provides an important benefit to our school communities. Under the provision, discounted tuition provided by a school or diocese to dependents of an employee are excluded from income (i.e., treated as an untaxed benefit). As family-oriented institutions, Catholic school staff are eager and encouraged to have their children attend school where they are employed. This exclusion allows our schools to remain competitive with district schools in the marketplace for teachers and other staff.

The House tax reform bill would remove this provision; the Senate’s bill does not change it.

What can you do? Contact your local Representative, especially if they are Republican, and inform them of the impact this change would have on your school community. The form letter is a great vehicle for expressing this concern.

Exclusion for Educational Assistance

Section 127 of the Tax Code has enabled an innovative Catholic education model to help thousands of students from low-income families achieve their academic goals and set themselves on a path to success. The Cristo Rey Network students work one day a week at a business, which in turn pays a portion of their tuition as salary. Section 127 incentivizes companies to participate in this life-changing program.

 

The House tax reform bill would remove this provision; the Senate’s bill does not change it.

It is important to recognize with both provisions that the primary use of these two Sections are for college tuition, and that is what Representatives are thinking of when they repeal them. That means our goal is to educate these Members of Congress about the unintended consequences of their actions. Your assistance in this work is critical, and please know we at the USCCB will keep up the efforts throughout this debate.

As always, please share with me your ideas, suggestions, and experiences by emailing gdolan@usccb.org

Best,
Greg