Outcry Over President’s 529 Tax Intensifies
State Treasurers & Local Financial Planners Agree: Taxing College Savings Is A Bad Idea
President Obama’s budget is scheduled to be released a week from today – but will it include his proposal to raise taxes on college savings? That’s a fair question now that the White House find itself “on defense” for taxing the popular 529 plans that middle-class families use to send their kids to college.
The White House wants you to think 529s are “ineffective” and skewed to the rich, but the people who know best – the state treasurers who oversee these plans and the local financial planners who advise families on how to use them – disagree.
- Iowa: “The plan has drawn skepticism from the state treasurer and concern from families. ‘Paying for it with the people who have saved with 529’s is not the way to go about it. There can be some tightening up in certain areas, but 529’s have great success, especially in Iowa and I’ll be out there working as hard as I can to make sure we keep it here in Iowa,’ said state treasurer Michael Fitzgerald.” (WHOtv)
- Kansas: “[Kansas Treasurer Ron] Estes, who has responsibility for administering Kansas’ 529 accounts in his role as state treasurer, said taxing account earnings as ordinary income would discourage participation. … ‘Why would you ever have 529s anymore?’ said Estes, a Republican. ‘If I have to pay taxes on my earnings, why don’t I keep it in my own individual investment account?’” (Garden City Telegram)
- Missouri: “Missouri Democrat chides Obama over college savings. ‘I do not believe raising taxes on families saving for college is the right way to go,’ said Missouri State Treasurer Clint Zweifel, who runs the state’s college savings plan, called MOST.’” (STLToday)
- Nebraska: “‘Those aren’t college savings plans of the multi-rich,’ State Treasurer Don Stenberg tells Nebraska Radio Network. ‘Those are the college savings plans of middle income Nebraskans who are able to put a little bit of money away for college for their kids.’ … ‘I think it’s really moving in the wrong direction to discourage people from saving for college through a 529 plan, which the president’s tax would do,’ Stenberg says.” (Nebraska Radio Network)
LOCAL FINANCIAL PLANNERS
- Indiana: “It’s part of a package designed to reduce taxes on the middle class, but Kurt Supe with Indy College Funding thinks it will have the opposite effect. … ‘Just the thought that he is proposing this scares you, and you have to ask yourself do you want to keep shoving money into those savings plans,’ Supe said.” (WIBC)
- Michigan: “Dennis Prout, owner of Prout Financial Design … says that tax break is why people decide to start these saving plans. ‘It would help with college education, but if that incentive is removed– these kids are not going to be incentivized to save for college education,’ said Prout.” (9&10 News)
- Nevada: “‘The president’s speech is supposed to be to help the middle class. Realistically this is a plan that smacks them right across the face,’ says local financial planner Jon Sanchez… ‘But if God forbid it does pass, this could be a disaster for colleges and the middle class because by far this is the most superior plan that’s out there.” (KOLO)
- Ohio: “Financial advisor Doug Vaclav says it will make college more expensive for families trying to save. … ‘It is going to be harder for them to go. They will probably have to borrow money and come out with student debt,’ Vaclav said.” (WKBN-TV)
- Texas: “Houston CPA Bob Martin says there are 12 million such accounts in the U-S, with an average balance of $21,000. ‘That tells me it’s a program used by middle class parents who want to send their children to college. This would not help the middle class.’ Martin predicts the savings plan would be abandoned without the tax incentive, forcing more people to turn to student loans.” (KTRK)
- “‘I was very surprised by the Obama 529 proposal because in many ways it is anti-middle class for families trying to afford college,’ said Joe Hurley, founder of the SavingforCollege.com website.” (The New York Times)
- “Erik Bruvold of National University’s Think Tank said the President is sending two adverse messages. ‘One is I think it will discourage savings for college which is a problem. … The second thing is it further, sort of, encourages the real cynical view that people can’t rely upon promises made by the feds,” he said.” (KUSI, San Diego, CA)
- “‘This would eliminate all new investment in 529 plans,’ said Mark Kantrowitz, publisher of Edvisors.com, a financial aid Web site. He noted that Obama’s proposal would treat the earnings on 529 plans as student income, which would hurt a child’s chances of receiving financial aid.” (The Washington Post)
This week, House Republican Conference Vice Chair Lynn Jenkins (R-KS) will introduce bipartisan legislation to preserve and modernize the current tax-free treatment of 529s.
– See more at: http://www.speaker.gov/general/outcry-over-president-s-529-tax-intensifies?Source=GovD#sthash.oBSIJcjp.dpuf
Latest posts by Office of the Speaker (see all)
- Congress Awards Senator Dole with Congressional Gold Medal - January 17, 2018
- This Will Help American Manufacturers Compete In A Big Way - January 17, 2018
- TOMORROW: Defending Defense: A Conversation with Speaker Ryan on Military Funding and Readiness - January 17, 2018