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We Take "Broad Bases" Very Seriously
Advocating sound tax policy is a tough job. It's easy to acknowledge the economic benefits of broad bases and low rates in theory, but sometimes the ramifications of this policy stance hit close to home. For me, this problem is nowhere more evident than in the topic of this blog post: work-related education deductions.
According to the IRS, there are five conditions one must meet to deduct education expenses:
1. You must be an employee or be self-employed.
2. You must meet the minimum job requirements for your work (as per your employer's demands or by state law).
3. The courses maintain or improve your skills.
a. Or you are required by law or your employer to take the courses to keep your current salary or position.
4. The courses do not lead to a new line of work.
5. You (not another party) pay for eligible education expenses.
It's interesting just how much falls under this deduction. In addition to tuition and fees, you can also deduct books, supplies, research costs and transportation. Mileage is deductible at 50 cents per mile; parking, tolls and public transit are deductible too. If your education sends you out of town, your overnight lodging, plane ride and 50 percent of your meal costs count for a write-off.
In a few short weeks, I will start work on my master's degree in economics and I plan to take advantage of this deduction next April. Proponents of work-related education deductions will point to young professionals like me and insist that these types of incentives are absolutely necessary to economic growth.
However, despite my direct benefit from this program, I would like to see work-related education deductions eliminated. If the saved revenue from the closing of this loophole were put toward lowering the overall individual income tax rates on everyone, our economy would see greater growth and prosperity.
We should structure our tax policy in the most neutral way possible because we don't know where the next big innovation is going to come from. It may come from someone who has three advanced degrees, but it might just as easily come from someone without a college education. Policymakers have no way of predicting the future, so they shouldn't pick winners and losers via the tax code.
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About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.