Tax credit will benefit students

By By Alan Monsen

By Alan Monsen

This past week brought news of Citibank, on the receiving end of the government bailout, attempting to buy a jet worth $50 million. Comparing that money with a student perspective, the $50 million could pay for $1,923.08 in tuition for 26,000 enrolled U students8212;a worthwhile investment that would have more meaning and function than a plane used a few times a year.

With no student bailout plan in sight, the burden rests on the students to get their voices heard. In this lopsided system of underfunded education, a reality of rising costs and budget cuts stands before us.

One small measure that advocates for students is House Bill 35. Although a baby step, it could help students down the road. The Nonrefundable Higher Education Tuition Credit bill appears to help combat the rising wave that will soon hit students. The bill, if passed, would be two-fold.

First, it would create a nonrefundable tax credit equal to the amount of the qualified tuition expenses paid.

Second, it would set up an income tax return contribution to a Utah Educational Savings Plan account.

“The goal of the bill is to encourage a higher level of education and invest in the students, who will want to then stay here and give back to this great state,” said Rep. John Dougall, the bill’s sponsor. “The Utah Educational Savings Plan accounts will allow alumni and parents to invest in their kids’ educational future.”

Hopefully the future does not reflect the bad marks Utah received by the National Center for Public Policy and Higher Education. In its report for 2008, Utah received an F grade for not being affordable for students and their families.

The proposed bill would set up a 5 percent nonrefundable tax credit available for students paying tuition starting this year. The student could claim a tax credit in the full amount of tuition paid, but only use 5 percent of the credit on the taxes during any given year, allowing for a quick build-up of credit that will help in the long run when the taxes are more expensive.

For example, a full-time sophomore would pay $2,000 for tuition. Working at Dunkin’ Donuts would lead to $500 in mandatory taxes at the end of the year. The government would then match the student’s tuition with a $2,000 nonrefundable tax credit, which could go toward paying off taxes. The catch is that you can only use a portion of the tax credit8212;equal to 5 percent of your total taxes. For our sophomore, that would be $25, leaving $1,975 to be used later. A $25 credit for the year seems laughable and almost pathetic, but the ingenuity of the bill kicks in at this point. The $1,975 remaining credit will roll over to next year’s taxes, and again, and again. Thirty years down the road, when you owe $5,000 in taxes, you can use the growing tax credit to pay 5 percent of it8212;$250.

Though it is somewhat difficult to grasp, a four-year student at the U will generate approximately $16,000 in tax credits over the course of their education.

The rally on Friday might have gained a 15-second spot on the nightly news, but it will take more students contacting their representatives via phone, e-mail or in person to bring about any influence.

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