Trump’s tax cuts for Betsy DeVos and the very rich are being paid for by education cuts

Education Secretary Betsy DeVos will testify before Congress on Wednesday about her priorities for the department just weeks after she proposed billions of dollars in cuts for education spending in fiscal year 2020.

DeVos has labeled the cuts “tough choices,” but new analysis from the Center for American Progress Action Fund (CAPAF) shows DeVos’ personal savings from the 2017 GOP tax bill alone could have covered a significant chunk of them.

(ThinkProgress is an editorially independent news site housed within CAPAF.)

According to her 2018 personal financial disclosures, DeVos’ income was somewhere between $46.8 million and $109 million, mostly stemming from LLCs, limited partnerships, and distributive shares. CAPAF’s analysis estimates the Trump tax cuts likely saved her $10 million or more in the last year alone.

Seth Hanlon, a senior fellow at the Center for American Progress who focuses on federal tax and budget policy, said DeVos was “illustrative of the windfall that extremely wealthy business owners were handed in 2017.”

“Because her family’s company, Amway, is — as we found out from a letter they sent to Congress — structured as an S-corporation,” he explained, DeVos’ holdings were eligible for a special new deduction created in the tax bill. The tax changes Trump and Republicans implemented in 2017 actually reduced the top rate for these types of holdings from 39.6% to 29.6% taxation.

“They sold this new deduction as a small business tax cut, but the kinds of businesses that really benefit are Amway, the Trump Organization, and their owners,” Hanlon said.

Though Trump’s Treasury Department initially claimed the tax cuts would pay for themselves through growth, they have not. Corporate tax revenue has plummeted since the bill’s enactment, fueling the largest budget deficits in American history.

With this predictable result, the Trump administration — which also once promised to eliminate the budget deficit entirely — is now proposing spending cuts to education. DeVos made a budget request last month that included $6.7 billion in cuts, claiming they were eliminating “programs that do not address national needs, duplicate other programs, are ineffective, or are more appropriately supported with state, local, or private funds.”

The proposed cuts would decimate programs like the federal work-study program, the 21st Century Community Learning Center after school program, the American History and Civics Education program, and the Full Service Community Schools academic and social services program. An initial draft also included cuts to the Special Olympics, but Trump countermanded those cuts personally after public outrage.

Ironically, as the CAPAF analysis noted, the $10 million DeVos may have received in cuts from the tax bill could have provided work-study funding for 5,600 students, Nevada’s entire share of the 21st Century Community Learning Center after school program, or funding for Full Service Community Schools academic and social services at schools in 20 communities.

“We knew what was gonna happen,” Hanlon said. “As soon as the ink was dry, they would turn around and say ‘We can’t afford investment in children, investment in schools, and many other areas because of mounting budget deficits.’ And the biggest reason the budget deficit has increased in the past two years is the revenue loss in the tax bill.”

To make matters worse, the Trump administration is quietly pushing to make the tax cuts permanent at a cost of another trillion dollars over a decade, again benefiting the very wealthy. “Clearly, that trillion is way more than the cuts to education programs,” Hanlon observed, and even more than the discretionary budget for the entire Education Department.

Michael Linden, a fellow at the Roosevelt Institute and a Tax March board member, said the Trump tax break for “so-called ‘qualified business income’ is one of the worst provisions in a GOP tax law packed to brim with bad ideas.”

“It was sold as a boon to small business,” he said, “but Betsy DeVos’s $10 million tax break shows that’s not the case at all. It is appalling, if not surprising, that after pocketing a tax break that was supposed to be for small businesses, she is turning around proposing massive cuts to education programs that benefit everyday Americans.”

DeVos did not respond to a request for comment about her tax benefits and the proposed education cuts.


Reposted from ThinkProgress