House panel approves education tax relief bill

WASHINGTON -- House Republicans moved Thursday to provide new tax relief to defray the education costs of low-income families, sending legislation to the House floor over the objections of Democrats saying the federal budget can't sustain another GOP-backed tax cut.

The bill, approved by the Ways and Means Committee on a nearly party-line 22-14 vote, allows families to claim up to $3,000 in above-the-line deductions for K-12 educational expenses at public, private, religious or home school.

The deduction, already available for higher-education costs, would be limited to parents with incomes of $20,000 or less -- $40,000 or less for married couples. It could be used for tuition, tutoring, supplies, transportation, computers and other school-related expenses.

"It provides a big financial boost to parents who will have new resources through tax relief. The money can only be spent improving their child's education," said Rep. Bob Schaffer, R-Colo., the legislation's sponsor.

But Democrats, who blame last year's 10-year, $1.35 trillion tax cut for the return of federal deficits this year after four years of surplus, said the bill would add to the government's financial woes while shifting money from public to private schools.

Democrats disagree

Democrats "don't take this legislation seriously," said Rep. Charles Rangel of New York, top Democrat on the committee. "It's more political than sound tax policy."

On Wednesday, Democratic opposition led to the defeat of a House GOP effort to make permanent the educational provisions of last year's tax package. Those provisions, which include tax breaks for educational savings accounts, are to expire in 2010.

Committee analysts said the Schaffer bill would benefit about 18 million families a year over the three-year lifetime of the bill, with an overall cost of $4.9 billion. They said a married couple earning $35,000 and claiming the maximum $3,000 would save about $450.

But Democrats said few people would get that much, noting that many low-income families don't make enough to pay income tax.

They also said the bill would be subject to abuse, with people claiming taxi rides to school and $150 sneakers for gym class in filing for deductions.

House Majority Leader Dick Armey, R-Texas, said he planned to bring the bill to the House floor next Thursday. The Democratic-controlled Senate is unlikely to take it up.

Work remaining

President Bush has also suggested that Congress take up other tax relief measures before it finishes its work this year to restore investor confidence, including raising the amount of stock market losses that could be deducted from income taxes.

But with Democratic opposition and the prospect for deepening deficits in the near future, the White House has held off on pushing new tax proposals.

"The issue is how, or if, to provide stimulus to the economy and do so in a way that will be meaningful and consistent with fiscal discipline," White House press secretary Ari Fleischer said Thursday.

Sen. Charles Grassley of Iowa, top Republican on the Senate Finance Committee, said the White House appeared divided on the issue. "You have one part of the White House looking at this as something that needs to be done. Another part is raising questions about the wisdom of it," he said.