Dynarski talks education and tax reform with LA Times

January 30, 2015

The White House is backing down on a minor provision detailed in the Obama administration’s tax reform proposals, but Susan Dynarski doesn’t think that provision should be given up on so easily.

The Los Angeles Times’ Kathleen Hennessy writes about Section 529 college savings plans in “One small attempt at tax reform illustrates the challenges ahead,” posted January 29. Section 529 plans currently allow families to “make withdrawals free of capital gains taxes as long [as] the money is used for college tuition and expenses,” explains Hennessy. President Obama’s proposal would eliminate those tax benefits, but provide a new credit of up to $2,500 per year to a larger group of people. The White House believes more than 8 million people would see a reduction in their taxes as a result.

Key Congress members lobbied the White House to drop the Section 529 revision, but Dynarski agrees with the White House’s viewpoint that more affluent families benefit from its current iteration. “These are high-income families that tend to save their money and tend to send their kids to college anyway,” Dynarski told the Times.

Dynarski’s argument falls in line with other reports regarding Section 529, but only time will tell if the federal government sees the need to include it in future tax reform.

Susan Dynarski is a professor of public policy, education and economics at the University of Michigan, where she holds appointments at the Gerald R. Ford School of Public Policy, the School of Education, the Department of Economics, and the Institute for Social Research.