Resist Now. In The Name Of Equity.

Governor Malloy’s proposed budget gives a tax break to the rich.

Here’s what it is:

He advocates extending the 529 college savings plans, called CHET (Connecticut Higher Education Trust), to savings plans that can be used for K-12 education as well as college. As reported in the well-researched and comprehensive article in The CT Mirror  by Jacqueline Rabe Thomas on January 16, 2018, the state currently allows parents to avoid paying state income taxes each year on up to $10,000 that they put into a college savings account. In addition, they don’t have to pay taxes on the earned income when the money is withdrawn to pay for college.

Using 529 accounts to fund K-12 education in addition to college is part of the new Republican/Trump tax plan. States can go along with that tax plan or become decoupled from it. Governor Malloy has chosen to keep the state and federal tax plans coupled and go along with Donald Trump. The Connecticut General assembly will decide whether or not to go along with Dan Malloy.

Here’s how it will work:

According to figures compiled for The Connecticut Mirror by the financial services company Vanguard, this is the picture for Connecticut families.

  1. Family A has a baby and, as soon as the baby is born,  puts $200,000 into a 529 savings account for the future education of that baby. The family then withdraws $10,000 a year to pay for the child’s K-12 private school education. The family avoids paying $49,800 in federal taxes over the 13 years. At the end of the high school years, the family will have $382,000 in the account to pay for the child’s college education.
  2. Family B has a baby and, as soon as the baby is born, puts $66,000 into a 529 savings account for the future education of the baby. The family withdraws $10,000 a year to pay for the child’s private school K-12 education. The family avoids paying $18,200 in federal taxes over the 13 years. But the family will have no money left in the account to pay for college.
  3. Family C has a baby and does not have any money to deposit in a chunk to a 529 savings account at the baby’s birth but saves what it can over the following 18 years for college expenses. All savings are needed for college; there is no money available for private K-12 education. There, probably, is not enough to fully fund college education.
  4. Family D has a baby and has no ability to save in any way for college.

So the only people who will profit from the plan that Governor Malloy is proposing are the very wealthy, only those who qualify as Family A. Donald Trump’s tax plan and Dan Malloy’s budget proposal have no benefit for Family B, Family C, and Family D.

The gap between the haves and the have-nots widens. The rich get richer and the poor stay poor – and the middle class struggles.

And here’s the real kicker: The rest of us will pay for that tax break for the rich. The Governor’s Office of Policy and Management estimates that 529 plans for K-12 education will cost the state $39 million per year.

Here’s why the Governor’s proposal is wrong:

  1. We barely have enough money to keep the lights on in the state, yet the Governor is asking all of the citizens in Connecticut to fund this substantial tax break for its wealthiest citizens.
  2. There will be less money available to fund public schools, especially those in high poverty areas that depend on state funding, because of the added strain on the state budget caused by the state supporting the extension of the 529 savings plans to K-12 education.
  3. The access to private school will not be extended to middle income families. In Connecticut, private high schools cost day students between $43,600 and $48,080 for tuition alone. Catholic high school tuition is between $14,300 and $19,800 per year. Private elementary schools cost over $40,000 per year, and Catholic elementary schools charge about $8,000 for tuition.                                                                                                                    Middle income families cannot fund a private K-12 education; it is clearly an option for only the wealthy The total cost of a private K-12 education in Connecticut is between $260,000 and $570.000. Even an education at a local K-8 parochial school and a regional Catholic high school costs between $130,000 and $150,000. Paying for any of these schools is out of reach for middle-income families who are saving for college. So those who claims that Donald Trump’s tax plan and Governor Malloy’s proposal is extending school choice to anyone other than the incredibly affluent are not realistic. In fact, they are wrong.
  4. Lastly, there are questions about exclusion of students based on sexual orientation and learning disabilities in non-public schools. Some religious schools have been found to be discriminatory concerning the sexual orientation and life style of their employees.  A case about that kind of discrimination in a Connecticut school is currently in the courts. State funds should not support schools that do not meet state standards for anti-discrimination.
  5. Connecticut has excellent public schools. Connecticut also has a problem with poverty. State funds are best directed to address the underlying causes of poverty which inhibit the learning potential of children mired in poverty rather than give tax beaks to those who already can afford private schools.

Here’s what you can do:

Call your state legislator (https://www.cga.ct.gov/asp/menu/cgafindleg.asp) and tell him or her to reject the Trump and Malloy proposal. Tell your state legislator to reject the extension of the 529 college savings accounts to 529 savings accounts for K-12 education. Tell your legislator that having 529 savings accounts for K-12 education is unfair, undemocratic, and fiscally irresponsible.

Then call your state legislator again, saying the same thing.

And then call again.

And again.

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