Why Was the Cruz Homeschool Provision a “Bad Deal”?
By Carole Hornsby Haynes, Ph.D. January 2, 2018
Sparks flew recently when Senator Ted Cruz filed an amendment to the tax reform bill allowing 529 college savings accounts to be expanded to include private, religious, and homeschools. The homeschool associations squared off in separate corners on the homeschool provision.
Constitutional attorney Deborah Stevenson with National Home Education Legal Defense charged that the Cruz Amendment was unconstitutional because the 529 accounts are federal government accounts with the federal government granting an exemption – a benefit – for taxation
to private individuals for education purposes. Under the 10th amendment, the federal government has no authority to grant a benefit to individuals for education purposes, since control over education is left to the states.
It’s true that no federal funds are deposited into 529 accounts, only after-tax funds of individuals. Here’s the problem. Because the federal government rules how you spend your own money from the account, the heavy hand of the federal government is exercising control over education.
Congress created the unconstitutional 529 college savings tax-advantaged plan, named after section 529 of the IRS code, during the Clinton administration in 1996. The government also created very strict rules about when and how and where the withdrawals can be used if the growth on the savings is to be free from federal income taxes and a 10 percent penalty. There can also be federal tax consequences to the funding of the plan.
The government determines which educational institutions are eligible. Here the U.S. Department of Education is involved also.
Textbooks and supplies that are “acceptable” expenses are those on the university’s approved list.
There are two types of 529 accounts – prepaid and savings. The State of Texas offers both. The prepaid tuition plan covers only tuition and required fees – and at Texas public institutions. If used elsewhere, the transfer value of your units can be applied. The savings plans can be used to pay qualified educational costs not covered by the prepaid plan such as books, lab fees, and room and board. Or there can be a combination.
For parents who like the idea that tuition can be prepaid for colleges, don’t get your hopes up for K-12 private and religious tuition.
Some of you have asked why I took a position against this federal school choice – “Why did you think the Cruz Amendment was a bad deal?” First, as a reminder, I am supportive of parental school choice, but not federal school choice.
On the surface the 529 savings plan for K-12 appears to be a really good deal for parents, but underneath there are huge dangers lurking for freedom-loving Americans.
The federal government has long since taken over control of public education at all levels. It’s been a gradual process, accomplished with enticement through monetary “benefits.” The Elementary and Secondary Elementary Act of 1965 was “sold” on the basis that it simply provided help for poor students – although politicians understood it was really about gaining eventual control over K-12 public education.
This was the nose of the camel in the education tent. It didn’t take the camel long to take up residence in the tent while shoving out parents and states. Later the ESEA was reauthorized as No Child Left Behind and the Every Students Succeeds Act of 2015.
Those politicians who voted for ESEA in 1965 have succeeded: the goal of ESSA is the nationalization of education. So much for “helping poor children.”
The federal government has also butted into higher education, “helping” students with loans and all manner of enticements along with requirements for colleges and universities. This intrusion of the federal government has created many of the problems we have in higher education today.
Now Congress wants to “help” parents with K-12 school choice options including private, religious and homeschools. Here are the time bombs they have handed to private education with the 529 legislation.
Since there are no standard nationwide or statewide curricula and textbooks used for private and homeschools, how is the IRS going to determine which will be qualified for the “tax benefit?” Will the IRS ask each family for a list of the curricula and textbooks being used? Will the politicized IRS get involved in deciding what is and what is not appropriate? Will the IRS ask for an audited list of your education expenses? Will the U.S. Department of Education get involved as well?
It’s inevitable that the federal government and IRS will develop similar regulations for K-12 about "acceptable" textbooks or curricula for children in private education.This is indirect and unconstitutional control over the lives of individuals and how they can spend their own money to educate their own children.
Through monetary enticements, the federal camel is poking its nose into the tent of K-12 private and religious schools. If politicians have their way, they are going to extend that enticement to homeschool parents as well.
But 529 plans are voluntary, you say? Yes, of course, but with the door open to private education, history shows the federal government will continue to grab ever greater control over education, through whatever means necessary, even unlawfully.
Congress might have done what it thinks is “helpful,” but the fact is, that through unconstitutional legislation over the decades, American freedom is being lost forever. It’s time Americans demand that politicians pass only constitutional laws and forget about “helping.”