President Trump recently unveiled some details of his tax plan and with this will come many articles purporting this solely as a plan with “tax cuts for the rich”. The problem with this view is that it over-simplifies a complex tax system and distracts from the true debate.
Take, for example, Bruce Murphy’s recent piece Tax Handout For Rich Kids where he focuses on the tax deduction students at University School (the wealthiest school in our area) receive. Never mind that the deduction has been around for over 3 years or that it applies to all private school tuition, a writer needed some page views on a current issue, so he took the low hanging fruit. I mean, very few are sympathetic to those taxpayers who can afford in excess of $20,000/year, right? Easy target.
Unfortunately, Mr. Murphy relies on a “focus on the exception” strategy to gain eyeballs and clicks. He coupled it with an inaccurate headline (kids don’t receive the deduction, their parents do) in an attempt to infuriate the reader (those damn rich kids get everything!).
However, the article fails to mention some important points which may change minds on the value of the deduction. For instance:
- Yes, University School parents get the deduction. But so to do plenty of lower to middle class parents who send their kids to places like Pius, St. Joan’s, or Thomas More. If the article highlighted a struggling family making sacrifices to send their child to a private school, would it have a different tone? Absolutely.
- It fails to acknowledge that the parents receiving the deductions pay income and property taxes that support a public school system they do not use. Rest assured, these “rich kids” are living in expensive homes with high property taxes, of which, a significant portion goes to fund the schools in their area. However, those same “rich kids” never use the resource they “pay for” and legally have the right to use. What would happen to public school budgets (and, subsequently, tax rates) if all the University School students decided to go to Homestead instead?
- The State has over 50 separate tax deductions many of which possibly provide tax relief to wealthy. For example, we offer a tax deduction for college savings plans, for child care, for social security income (even for the wealthy) and, most pertinent, we have a tax deduction for in-state college tuition paid for a student who goes to UW or (gasp) Marquette; a private university.
The one thing I have learned in over 20 years of doing taxes is that people generally like tax deductions that apply to them and are indifferent (at best) to tax deductions that they can’t partake in. Thus, it is easy for Mr. Murphy to paint the tax deduction for K-12 tuition as a break for the “rich” and get people riled up about it because the deduction does not impact a large portion of readers. He could’ve targeted other deductions, but those impact more people and it would be harder to whip up the outrage.Debates can be had on taxes and there are pros and cons to many of the deductions, as well as Trump’s new plans. But if we are going to have a debate, let’s provide accurate and full information regarding the benefits and costs instead of creating villains (Damn rich kids!) and indignation.