WASHINGTON — The namesake federal program of late Georgia U.S. Sen. Paul Coverdell would effectively end if the House GOP’s new tax plan becomes law.
The legislation, dubbed the Tax Cuts and Jobs Act, would phase out what are known as Coverdell education savings accounts, part of an overall consolidation of education savings programs.
Created as part of the 2000 Bush tax cuts — and named in honor of the Republican lawmaker shortly after his sudden death — the program allows families to save up to $2,000 annually in after-tax dollars per child in a tax-protected savings account. The money can go to tuition at private, public or religious K-12 schools and colleges or other education expenses such as tutoring or books.
The new Republican tax bill would end all future contributions to the Coverdell savings accounts and instead expand the contribution limits to similar 529 college savings plans and allow them to include K-12 money.
“Today’s broken tax code contains roughly a dozen tax benefits related to education, each with their own rules, requirements, and calculations,” a summary of the Republican tax bill states. “Strengthening and streamlining tax benefits for higher education will help families save for and better afford tuition and education expenses.”
The Coverdell savings accounts were controversial from the beginning. While in the Senate, Coverdell managed to get them through the chamber twice, only to have them vetoed by President Bill Clinton. Opponents argued they would hurt public schools and mainly benefit the wealthy, who could afford to put their children in private schools. Supporters said it would help incentivize school choice.
Read more AJC coverage of the GOP tax bill: