Senate Bill 20 passed another hurdle this morning, moving out of House Finance and to the floor for a full vote. As I recently highlighted, state lawmakers are pursing tax changes that would further shift responsibility for paying for public investments and services to low- and middle-income taxpayers and away from the wealthy and profitable corporations.
Senate Bill 20 includes a provision that would no longer allow taxpayers to deduct expenses for tuition and related expenses such as course-related books, supplies, and equipment. The federal tax code includes this deduction, but state lawmakers are proposing that the deduction be done away with.
Eliminating this deduction would come at a time when North Carolina students and families have seen a steady increase in the cost of a college education. And this trend will likely continue, as another round of tuition increases look to be on the horizon for students attending public universities in the state. Meanwhile, state funding for need-based financial aid has not increased in recent years, meaning students likely have to incur increasing amounts of student loan debt.
This proposed tax change is troubling when considering the growing level of student loan debt and what that means for an individual’s ability to make ends meet, build assets, and achieve financial security. In recent years, delinquency rates for student loan debt have increased, resulting in a host of additional negative outcomes for students. So, as students and families incur increased amounts of student loan debt and many are challenged with repaying this debt, state lawmakers would like to eliminate a tax provision that would help ease this particular financial strain.
It is shortsighted not just to continue shifting the tax load onto low- and middle-income taxpayers while keeping in place tax cuts for wealthy taxpayers but also because the state needs more people completing a post-secondary education. The jobs of the future will increasingly require a post-secondary education and higher costs and fewer supports to make that education affordable could mean fewer students will attend and complete a postsecondary education. This result will be bad not just for individuals who are not afforded access to opportunity, but for the broader economy as higher educational attainment is associated with higher incomes and stronger economic growth.
North Carolina needs a tax system that works for all taxpayers. This proposed tax change is yet another example of how ensuring economic opportunity for low- and middle –income families seems to not be a priority at the state level. Lawmakers should look to other opportunities to ensure the state’s tax system is able to support core public services, which would help make a postsecondary education more affordable for students and families.