Robin Hood in Reverse: State Tax Deductions Steal from Public Schools, Reward Rich Parents with 529 Accounts

janresseger

When Congress passed a major tax reform bill in December, it created the possibility of using 529 college savings plans for private K-12 education—a new way to save for private school tuition at public expense—especially when the states add their own tax credits and tax deductions to incentivize parents to use 529 accounts. Parents have been able to save for college using such plans, where the money appreciates with a financial benefit: The parents don’t have to pay tax on the interest that accrues while the money sits in the account.

NY Times columnist Ron Lieber explains how all this would work for a family using a 529 plan to help with private school tuition and later with college costs: “In a bill that offered many perks for the wealthy, the 529 provision was a particularly brazen giveaway… With 529 plans, you put money in, let it grow for years…

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