Study: Ending education tax breaks would boost job growth

The study comes as lawmakers in both chambers and parties are taking a top-to-bottom look at the tax code, ahead of potential tax reform markups in the fall.

{mosads}Still, lawmakers on both sides of the aisle have suggested that there should be some incentive for college tuition in the tax code. After a protracted debate, President Obama also recently signed new student loan legislation.

Democrats fought hard last year to extend the American Opportunity Tax Credit – and eventually succeeded, with the fiscal cliff deal keeping the credit around until at least 2017.

President Obama’s 2009 stimulus package originally implemented the AOTC, which was essentially an expanded version of the Hope scholarship credit. Republicans said that the expansions of tax breaks in the stimulus – including also of the Earned Income Tax Credit – were supposed to be temporary.

The Tax Foundation study says that getting rid of the education incentives would be allow for a 0.9 percent across-the-board rate reduction to be fully offset – leading to an $18.8 billion increase in gross domestic product.

But some more liberal economists have scoffed at the idea that the phase out for the education credits would cause such a disincentive for working.

House Ways and Means Chairman Dave Camp (R-Mich.) has also said that Reps. Diane Black (R-Tenn.) and Danny Davis (D-Ill.), both members of the tax-writing committee, are working to streamline preferences for higher education.