About that whole voucher tax thing…

Gov. Bill Lee speaks to reporters on March 19, 2019, about his proposal to introduce an education savings account program in Tennessee. (Erik Schelzig, Tennessee Journal)

The revelation that Tennessee’s new school vouchers could well be considered taxable income by the IRS set off a furor at the statehouse among both supporters and opponents of the “education savings account” law.

Education Commissioner Penny Schwinn’s statement to the House Finance Committee appeared fairly unequivocal when asked during a Monday hearing: “My understanding is this is taxable, yes.”

Voucher supporters were quick to pounce, noting that the law includes a provision that states the more than $7,300 vouchers would not be considered income. But the caveat there is the state can only write legislation affecting Tennessee law. The IRS might have different ideas.

Schwinn told reporters she had come to that determination in consultation with state Attorney General Herbert Slatery’s office. But a spokeswoman for the AG said his office would not be in a position to weigh in on federal tax matters.

Schwinn’s spokeswoman later issued a new statement seeking to clarify matters:

The Commissioner’s comments at the budget hearing today were intended to reflect the possible need for the program’s filing and issuance of federal information reporting returns rather than taxability. We are continuing to work through the details of what will be required for ESA program implementation.

So where does that leave things for parents concerned about being hit with a big tax bill if they take the vouchers? It remains unclear. And now Democratic lawmakers are (perhaps inevitably) asking for a delay in the bill’s implementation so it can all be figured out.

12 Responses to About that whole voucher tax thing…

  • James White says:

    Call your U.S. Congressman and let them know: No taxes on vouchers! And President Trump.

    • MARLE says:

      The republicans passed a tax bill in 2017 and there were vouchers in other states at that time. It is either IN the code to tax this money or NOT IN the code to tax this money. Which is it?

  • Phil Lassiter says:

    The voucher bill was a freshman blunder in policy making

    • James White says:

      No Vouchers are good. Privatization of local schools good (but they should be under total local control, not the state).
      Let the parents decide their child’s education, not some bureaucrat from the Federal or even State government.

  • Beatrice Shaw says:

    NO MONEY AWAY FROM SCHOOLS!!! WE NEED MORE MONEY!! Tax raises are totally justified for big business like roads. Why not tax increases for schools? Better nutrition needed and we need some supper programs for many students in urban areas

  • Diana Page says:

    Vouchers take much needed money from already underfunded public schools. Families which accept vouchers will put their children’s education and rights at risk. Most of the voucher money will go to religiously based schools, which have a focus on religiously based doctrines. It’s these schools which have pushed for vouchers because their finances were stressed. Vouchers are a financial subsidy to those who already can afford private education. It gives to the rich at a time when we already have a severely financially unequal society.

    The General Assembly should rethink vouchers, and update the Basic Education Plan to provide more funding for public schools. Our children are our future, and deserve more from TN.

    • James White says:

      Vouchers are just giving the taxpayer some of their money back.
      More and More government money is spent on education and more and more are the children failing and our country is loosing out to other countries that do not spend as much.
      In our Republic, a “financially unequal society” is going to happen and is OK.
      “Equal people can never be free for the simple reason that free people will never remain equal” – Robert Welch – 1969, Founder of the John Birch Society.

    • MARLE says:

      Of course private school finances are stressed; the parents are not only subsidizing public schools with their tax dollars but simultaneously paying out-of-pocket the tuition costs at the non-government school their child attends . If tax dollars can be legally used for college tuition at “religious” universities then why not at religious high schools?

  • PW says:

    Such vouchers, if regarded as taxable income by the IRS, will also count as income for the purpose of eligibility for food assistance, healthcare and other benefits – a fact that will make it impossible for many poor families to afford to access vouchers. But I’m sure the GOP knew this – this is really for middle-class kids, right?

  • Benton Temple says:

    We need to start over.

    The voucher bill has a stain on it from Casada and supposed, Lee staff, arm wrangling tactics.

    Just start over. The voucher bill stinks.

  • michael lottman says:

    Ditto the last comment and just start over or drop it. And first let’s figure out what we are trying to do, and for whom, and why. This will quickly be seen as the worst kind of special legislation, with the real purpose possibly disguised.

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