Editorial: Don’t take away tax break for families that opt for private schools

Published 12:00 am Saturday, March 10, 2018

Oregon lawmakers spent considerable time this year adjusting state laws to account for changes in the federal tax code. Small businesses may feel the pinch as a result, and so, too, may families who wish to send their children to private K-12 schools rather than public.

Because of House Bill 4080, Oregonians who want to use 529 education savings account money to pay elementary and secondary school tuition may have to pay state taxes on what they withdraw from the accounts. They will be able to take the federal tax break included under the new federal law, however.

The bill is awaiting action by Gov. Kate Brown. She should veto it.

There are, admittedly, potential constitutional problems with making some of those 529 withdrawals exempt from Oregon taxes. The state constitution bars using money from the state Treasury on any religious institutions, including schools. But, of course, not all private schools are connected to churches or other religious organizations.

It’s not completely clear, lawmakers heard, if using money held in 529 accounts for private-school tuition would violate the constitution. After all, money deposited in the accounts belongs to those individuals. The state Treasurer’s office is taking on the role of a bank where the accounts are concerned, and Oregon courts could decide money from the accounts isn’t really being unconstitutionally transferred to religious schools.

Unfortunately, the courts may not get the chance to decide. Service Employees International Union, which represents many public employees, and the Oregon Education Association, representing teachers, wanted the bill to pass. And a majority of lawmakers voted to bar the tax-free use of 529 moneys from all religious, private or public, elementary or secondary school tuitions.

Veto the bill, Gov. Brown.

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