U.S. House Republicans unveil college savings plan
July 8, 1999
Web posted at: 6:03 p.m. EDT (2203 GMT)
WASHINGTON (AllPolitics, July 8) - Parents and students would receive a tax break intended to
help them pay for college as part of a $800 - $900 billion Republican plan, said
top Republicans in the House Thursday.
"Although the federal government has a limited role in the
education of our schoolchildren, we should work within that role
to lighten the education bite whenever possible," said the author of the plan,
House Ways and Means Committee Chairman Bill Archer (R-Texas) in a statement.
"That means helping students and parents save for college."
Archer pointed out that soaring tuition prices at public and private colleges
necessitate the proposed tax breaks.
In the last two decades public four-year universities have increased
tuition on average by 390 percent, from $642 to $3,151 per year.
Tuition at private universities has jumped 440 percent from $2,881
to $15,581 per year, according to the National Commission on the Cost
of Higher Education.
Current law allows only public universities to offer prepaid tuition plans
to prospective students. The Republican plan, though, would not only allow
private universities to set up prepaid tuition plans to prospective students
but also make earnings tax exempt.
Another initiative would increase contribution limits for the so-called
Education Savings Accounts from $500 to $2,000 per year, and
allow their use for pre-college schooling -- a measure that could
benefit as many as 14 million families.
Archer said he also intends to include an initiative to boost
lagging public school construction by easing tax curbs on the
issuance of bonds by states and localities.
The three education initiatives announced by Archer would
cost the federal government between $7.5 billion and $10
billion. They would be wrapped into broader legislation, expected to
cut taxes by $800 billion to $900 billion over 10 years.
Democrats and the White House oppose the package on the grounds that it
caters to the rich and to corporate interests at the expense of
the poor. President Bill Clinton is all but certain to veto the bill
unless Republicans scale it back dramatically.
The White House has already invited congressional leaders to meet
with Clinton next week to discuss their legislative priorities.
Republicans were expected to press for major tax cuts.
Another part of the House Republican package, announced Wednesday, includes
a measure to reduce the top capital gains tax rate on investment profits to
15 percent from 20 percent, effective July 1, 1999.
The Republican plan would also include a new tax exemption for people who
provide long-term care to elderly relatives at home, as well as give
taxpayers a 100 percent deduction on insurance premiums.
In the coming days, Archer is expected to unveil a far more
costly and controversial initiative intended to ease income taxes and
relieve the so-called "marriage penalty" paid by millions of two-income couples.
The Ways and Means Committee has to finalize
Archer's tax plan by July 16, clearing the way for a vote by the
full House before Congress' August recess.