Why did Democrats oppose Ted Cruz's provision to allow funds from 529 plans to be used for homeschooling?

Question

Senator Ted Cruz proposed an amendment to the recent tax reform bill to allow funds from 529 plans to be used for homeschooling¹, but the Democrats voted against it and it did not make it into the final bill. I found that Cruz has said that Democrats opposed his amendment because

...the democrats hate homeschoolers. They hate that anyone gets out of centralized control, and so they filed an objection on procedural grounds and managed to get homeschoolers excluded. I think it was discriminatory, I think it was wrong, but homeschoolers unfortunately the democrats cut out of the legislation. So for 50 million school kids across the country, the provision allowing parents to save for public or private or religious or parochial schools, that's in there. But homeschoolers unfortunately the democrats succeeded in pulling them out, and that's frustrating and maddening, but nonetheless a big victory for kids across the country.

However, I couldn't find a statement by any Democrat as to why they opposed the amendment. I know that Democrats generally oppose school voucher programs which have a similar function as Cruz's amendment, so is that why Democrats voted against Cruz's amendment? I also know that Democrats generally oppose tax cuts -- and Cruz's amendment reduces the taxes paid by homeschoolers -- so is that why Democrats opposed it? On the other hand, Democrats generally support policies that increase taxes with the goal of reducing educational expenses paid by students and their families (e.g. offering "free college"); Cruz's amendment seems to be in line with the Democrats' goal of reducing educational expenses paid by students and their families.

Why did Democrats oppose Ted Cruz's provision to allow funds from 529 plans to be used for homeschooling?

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¹529 plans offer tax advantages for educational expenses.

Answer 1

Here is the statement from Senator Wyden (D-Oregon) regarding his opposition to the amendment:

Mr. President, Senator Cruz's amendment expands tax subsidies for upper income households to aid private or parochial schools by allowing 529 account balances to spend up to $10,000 a year on private or parochial school tuition and supplies.

Colleagues, this is nothing less than a backdoor assault on the public K-12 education system. The real goal seems to be to take more and more children from the public schools and put them into private schools and shrink the funds that would be available to the public schools that give all of America's children the chance to get ahead.

Members should oppose the amendment because it undermines America's public education system.

Source: Congressional Record from Dec 1, 2017

Unfortunately, there's no anchor tag to link directly to the relevant portion, so you'll have to use your browser's find function with a portion of the quote to find it if you want to read it in the original source.

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Note that Democrats opposed the entire amendment, not only the part for homeschoolers. That said, while Democrats have traditionally opposed all non-public schools, most have been more opposed to homeschooling than to private schools. The reason that only the homeschooling portion of the amendment was blocked was because Democrats invoked a technicality in Senate rules that allowed them to block that portion, but would not have allowed them to block the other portions.

Here are a couple of news articles describing the parliamentary procedure used to strip out the homeschooling portion in more detail:

San Antonio Express-News: Democrats challenge Cruz's homeschool provision
Wall Street Journal: Cruz Provision on 529 Plan for Homeschoolers Falls Out of Bill

Answer 2

I haven't found anything specific, but I see two possible reasons.

Possibility 1: The Democrats voted against to be obstructionist.

Given that the Democrats couldn't block the bill itself, it's possible that they were just looking for any opportunity to shoot down a Republican initiative. Since this one ran afoul of the Byrd Rule, it was possible for them to get it stricken from the bill.

Possibility 2: The Democrats objected to repurposing of 529 plans.

As the Wikipedia article you linked to states, the original intent of a 529 plan was to help pay for college and other forms of higher education. The Republican tax plan expands this to assisting in paying for private/religious K-12 schools. This changes the purpose from "Keep studying after high school" (something Democrats like) to "Avoid public schools" (something Democrats dislike and Republicans like).

The Cruz amendment went beyond that to extend it to pretty much any type of schooling - tutoring, home schooling, etc. This basically would mean that parents who home school their children could put tax-exempt money into the plan, and then pay themselves back for any school-related expenses. This then can lead to a lot of normal things being claimed as tax expenses: for example, is providing room and board to a homeschooled child a deductible expense in the same way that paying someone else to house your kid would be?

I have no numbers to support this, but I have the impression that the majority of home schooled children are being home schooled for religious reasons. Thus the Cruz amendment turns a Democrat-supported "increase education" tax plan into a religion-boosting tax break.

Answer 3

There is a strong connection between the US Democratic party and the National Education Association.

The National Education Association is basically a teacher's union. The vast majority of its members are teachers and/or administrators in public schools. With that given, it's probably fairly clear (and understandable) that the NEA considers funding for public schools to be a high priority, and anything that could (even potentially) reduce that funding as seriously problematic.

The NEA has around 3 million members, spends quite a bit on lobbying, and makes substantial contributions directly to election funds and such (enough to rank as the third largest political donor in the US, according to opensecrets.org).

The NEA is heavily Democratic. For example, in the 2016 election cycle, their expenditures for Democrats/against Republicans totaled about $6 million. Their total in the other direction totaled $268 (again, from opensecrets.org).

So, the NEA contributes a lot of money and votes to the Democratic party. Specifically, enough for the NEA to be one of the single largest voices within the Democratic party. That leads to the Democratic party giving extremely careful consideration of the NEA's viewpoint in any discussion that might affect public education.

In fairness, I should probably add that in a fair number of cases, Democrats (both politicians and just normal voters) might well take similar positions in any case. It's fairly easy to see public schools as relatively egalitarian, and private schools/home schooling as relatively elitist. That would probably lead many Democrats to favor public schools over alternatives, regardless of the NEA or any other group specifically taking that position.

With that background in place, let's consider the Cruz amendment. It would not directly reduce funding for public schools--but it would probably make home schooling or private schools a little more feasible for a few more people. Although the amendment wouldn't directly affect funding (and such) for public schools, in the long term anything that makes alternative education feasible for more people could lead to a reduction in the status of public schooling.

Reference

OpenSecrets.org NEA summary

Answer 4

First of all, the question is wrong. Cruz' proposal would have allowed using a 529 for all elementary and secondary school expenses, not just for home schooling. I suspect that the home-schooling was only thrown in as red meat for his constituents, but was not the main target of the proposal. Primarily, this proposal was intended as a tax giveaway to wealthy parents.

A 529 plan is intended as a savings/investment plan, much like a 401(k), that allows middle-class parents to save for years or decades for their children's college expenses. It is tax free as an incentive for middle-class parents to save early and for a long time.

K-12 tuition is not recognized by the IRS as a valid tax deduction; parents have to pay for it out of their after-tax income.

Cruz' proposal would have created a loophole only open to wealthy parents: they could set up a 529 for their children, contribute to it pre-tax, and immediately use it to pay elementary/secondary tuition. For wealthy parents, a 529 for college expenses doesn't make too much sense; they can afford to simply pay cash, and often have better investment options available outside the 529 plan.

Middle-class parents, on the other hand, usually can't afford to raid their 529 plans for elementary/secondary tuition.

So Cruz plan would have turned a middle-class incentive to save into a tax loophole for the wealthy.

Update:

The source for this was not a formal Democratic Party statement, but rather two editorials in the New York Times.

https://www.nytimes.com/2017/12/19/opinion/republican-taxes-school-savings-.html https://www.nytimes.com/2017/12/21/your-money/529-plans-taxes-private-school.html

The second of these editorials points out two more relevant points:

• The homeschooling part was removed for technical reasons. It doesn't go into details about what role the Democrats played in that removal.
• The new provision favors wealthy parents even more than I described above. This is because middle class parents may be forced to drain their 529 plan to pay for school tuition if they want to send their children to a private school.