It's back to school time, and in the coming weeks you'll see school buses in your neighborhood and playgrounds full of kids. This is an expensive time for parents, and states are taking a variety of approaches to cushioning the blow of those pesky back-to-school purchases. Here's a brief overview:
Sales Tax Holidays: As discussed in this earlier post, sales tax holidays are little more than political smoke and mirrors, offering minimal tax cuts with maximal publicity. Maryland's controversial five-day sales tax holiday started on Wednesday. The Baltimore Sun has an interesting take on this gimmick.
Income Tax Reductions: Minnesota offers an income tax break for qualifying families who have children in school. The K-12 Education Subtraction and Credit can be used to offset the cost of books, tutoring, and required school supplies. For more on the credit, click here.
User Fees: Some policymakers may point to user fees as an alternative way to soften the back-to-school blow compared to funding education adequately through the tax code. However, user fees are regressive and aren't based on ability to pay. Here's an interesting article detailing the back-to-school costs for one Kansas family. Proponents of adequately funded schools and fair taxation should take notice and give this funding trend an F.
The three approaches above offer a wide variety of policy alternatives for lawmakers looking to assist families. However, only Minnesota's income tax credit and subtraction offers targeted, long-term, and fair tax assistance for families with children in school.
Parts of this post were originally published in CTJ's Tax Digest, a weekly email that highlights state and federal tax trends across the country. If you'd like to subscribe to the digest send an email to: ctj@ctj.org