The New Tax Law’s Subtle Subversion of Public Schools

The law will facilitate private-school attendance and put more obstacles in front of the neediest students.

A broken tile mural that reads "We Ought to Protect Our Neighbors And"
A tree trunk lies in the entrance way to West Philadelphia University City High School, which was closed amid funding cuts and declines in property-tax revenue. (Tom Mihalek / Reuters )

This story was updated on February 7, 2018.

American public schools have long been, and remain, deeply unequal. At the most dilapidated and underperforming schools, teachers are blamed for stagnant graduation rates, students are derided for low tests scores, and parents are chastised for not being involved. Too often, however, scrutiny of these schools’ performance doesn’t take into account the structural factors that have contributed to their outcomes. One of the most significant factors contributing to the chasm of educational opportunity is the way that schools are funded.

According to the most recent data made available by the Department of Education in 2015, the wealthiest 25 percent of school districts receive 15 percent more in per-student funding from state and local governments as compared to the poorest 25 percent of school districts. Nationally, that accounts for a $1,500-per-student funding gap, a gap that has grown by 44 percent since the 2001-02 school year. It’s a system that leaves the poor with less and the rich with more—a phenomenon that the new GOP tax law has the potential to make even worse.

Under the Republican plan passed through Congress last December, families can now use 529 college-savings plans to pay for private K-12 schooling, allowing them up to $10,000 in tax-free withdrawals per child annually. This new provision effectively operates the same way a voucher program would, but without the name: While vouchers distribute funds directly to parents to pay for private school, the new law uses the tax code to facilitate private-school attendance.

This change in tax law will largely benefit the rich, providing families that are aware and take advantage of 529 plans—families that are predominantly wealthy and can likely already afford private education—with a $10,000 tax deduction. (It’s worth noting that since 529 plans are administered by states and some states have stipulations in place that don’t comply with the new rule, families who make withdrawals could face high state-tax bills or tax penalties, depending on the state in which they live.) This deduction also creates an incentive for parents to take their children out of public schools and put them in private ones. Without those pupils, many public-school systems could get less money—but have the same overhead costs—because they rely on enrollment numbers to qualify for much of their funding.

The Republican plan also caps the deduction for state and local taxes at $10,000. Public schools receive most of their funding from these state and local taxes, and with the cap, many may have a more difficult time finding the money they need to keep their doors open. “It is nothing more than a massive transfer of wealth—a giveaway to corporate special interests and the wealthy paid for by working families and students,” the National Education Association President Lily Eskelsen García said in a statement. According to an analysis from the NEA (which represents more than 3 million teachers, school staff, and administrators and has historically supported Democratic candidates), the tax law would, over the next 10 years, blow a $150 billion hole in state and local revenue earmarked for elementary and secondary schools, putting more than 130,000 education jobs at risk. California would lose more than $35 billion in funding, New York $31 billion. Individual schools will have to come up with millions of dollars to make up for the shortfalls; those in poorer districts will be hit the hardest, as they already receive insufficient funding to begin with.

“We already have a huge teacher shortage due to multiple factors,” said Jose Vilson, a middle-school math teacher in New York City’s Washington Heights neighborhood. “Losing that many teachers would only exacerbate the issues of large class sizes, special-needs students not getting serviced, lack of arts and music classes, and the over-reliance on narrow measures of learning.” To Vilson’s latter point: With fewer teachers and subsequently larger class sizes, educators often have less of an opportunity to provide students with the sort of individualized learning opportunities that come with having a smaller group of students, and that are most closely correlated with increased student achievement and developing deeper, more conceptual understandings of various subjects.

Many GOP governors have already slashed billions of dollars in public-school funding, often redirecting education funding toward programs like vouchers, although recent research suggests that vouchers may not have the unequivocally positive impact that its proponents espoused. In fact, as Kevin Carey of the New America Foundation has noted, recent studies have found that the educational achievement of students who received vouchers to attend private schools has often suffered. In one study, the Brookings Institution’s Mark Dynarski found that voucher students scored lower on reading and math tests than similar students who remained in public school and that, more broadly, the assumed academic superiority of private schools as compared to public schools is no longer necessarily true.

Even the Thomas B. Fordham Institute, a conservative, pro-school-choice think tank, found that “students who use vouchers to attend private schools have fared worse academically compared to their closely matched peers attending public schools.” Interestingly, however, the study also found a correlation between the existence of a voucher program and improved academic performance among public-school students who didn’t take advantage of it; the researchers attributed that finding to the competition created by vouchers.

That the competition created by school choice improves education for all is certainly a compelling idea. President Trump touted this logic on the campaign trail before the 2016 election when he advocated for reassigning $20 billion in federal funding to a block grant that would enable poor students to enroll in the private or public school of their parents’ choice. “Competition always does it,” he said that September. “The weak fall out and the strong get better. It is an amazing thing.”

The GOP education platform is predicated on the idea of “school choice,” stating that it “gives parents the option to choose the school best suited for their child’s success.” Education Secretary Betsy DeVos has long been a champion for vouchers, arguing that they reflect “investments made in individual children, not in institutions or buildings.” The rhetoric is enticing. School choice, in theory, is incredibly appealing and sensible—no one would disagree that it is important for parents to be able to send their children to a strong school where they are able to learn and thrive. Additionally, few would disagree that there are examples of children who have been well-served by the opportunity to attend a different school based on a voucher program.

But in many ways, the very notion of school choice operates under a false pretense—an assumption that every child has the same set of choices to make and the same places to choose from. It doesn’t contend with the host of structural factors including housing, transportation, and low-wage jobs that preclude parents in poverty from taking advantage of opportunities presented under the guise of choice. Nor does it acknowledge that the disparities in school funding and quality are not simply grounded in the different socioeconomic demographics of neighborhoods, but rather are the result of decades of public-policy decisions meant to socially and economically isolate black people and many immigrants.

This makes especially dangerous the free-market logic of school choice, which operates in a paradigm of winners and losers rather than treating quality education as a universal public good with investments that intend to help all children. The new tax provisions will reinforce the misperceptions about school choice and their consequences.

The rhetoric around competition reflects either a misunderstanding or purposeful ignoring of  how schools are beginning at the same proverbial starting line, when in fact structural disparities such as property-tax funding continue to stagger these starting lines. And over the past 20 years the gap has only continued to widen. According to a Stanford University study, over the past two decades the gap in academic achievement between children from high-income families and low-income families is approximately 40 percent larger among children born in 2001 than among those born 25 years earlier.

Since the Puritans set up the first public schools in the Massachusetts Bay Colony, local school districts have largely relied on property taxes for funding. In 1973, Demetrio Rodriguez sued the state of Texas, accusing it of violating the equal-protection clause of the Fourteenth Amendment on the grounds that his children in the predominantly Mexican American West Side of San Antonio were not receiving adequate funding for their schools. The case advanced to the Supreme Court, which ultimately held that the school-funding mechanisms in Texas were constitutional. In his opinion, Justice Powell stated that the system of school funding in Texas “was not the product of purposeful discrimination against any class, but instead was a responsible attempt to arrive at practical and workable solutions to the educational problems.”

Justice Powell’s opinion, however, seems to under-appreciate the extent to which resource allocation allows students to receive any semblance of a quality education. It also reflects a fundamental misunderstanding about how systemic inequality perpetuates itself—it need not exist under the pretense of being purposeful in order to be real.

The federal government has never stepped up in a substantive way establish more equitable funding practices. Lyndon Johnson—who had, as a young man, taught fourth-, fifth-, and sixth-graders in an impoverished school for the children of Mexican immigrants in the Rio Grande—signed the Elementary and Secondary Education Act into law in 1965 as part of his War on Poverty, giving schools some federal funding to reduce the disparities between rich and poor school districts. But the federal government still contributes only 10 percent to the cost of running public schools in the United States, less than its counterparts in most other developed countries in the world. Per the National Center for Education Statistics, 93 percent of education expenditures come from state and local funding. As a result, as disparities in wealth and income continue to expand, so do the disparities in school funding. As The Atlantic’s Alana Semuels has previously pointed out, in the 2014-15 school year the schools in the wealthy Greenwich, Connecticut, spent $6,000 more per pupil as compared to the impoverished city of Bridgeport, in the same state.

The Republican tax law is poised make these disparities worse. What’s perhaps most insidious is the public’s lack of familiarity with the  harmful impact of tax deductions on public-education funding. Because private-school money is not being directly given to families, the potential for the tax law to exacerbate educational inequality has moved largely under the radar.

Until lawmakers can disentangle property taxes from public education, inequalities—perpetuated by the Supreme Court and Congress—will persist. Schools shouldn’t have to choose between serving a student with special needs or cutting an art class, laying off teachers or using outdated textbooks. But these are the positions that far too many schools have been placed in, and only a meaningful acknowledgment of the problem can begin the process of getting them out.