House OKs bill granting tax-free school savings

WASHINGTON — The House voted Thursday to give tax breaks to families who save for school expenses, including private-school tuition. Most Democrats argued that only the well-to-do would benefit.

The measure faces a certain presidential veto if it clears the Senate. But House Republicans, with an eye to 1998 congressional elections, have used this bill and others to define an education agenda.

The vote was 230-198.

Maine Reps. John Baldacci and Tom Allen voted against the bill.

The majority Republicans argued the bill would put families in greater control of their children’s education.

It would authorize tax-free savings accounts for school expenses from kindergarten through high school. Families, relatives or even corporations and foundations could put up to $2,500 a year into an account, and the interest and withdrawals would be tax-free.

“What we’re trying to do is to help middle-income and poorer folks in America save the money they can save to help their children get a better education,” said Rep. John Boehner of Ohio, chairman of the House Republican Conference.

But Democrats, armed with data from President Clinton’s Treasury Department, contended 70 percent of the tax breaks would go to the richest 20 percent of families, and money would be siphoned away from public schools.

“How many people making $25,000 a year with their children in public schools are going to be able to save $2,500 a year?” asked Rep. Tim Roemer, D-Ind.

Democrats also said the kinds of spending covered by the breaks are so vague that they would invite Internal Revenue Service snooping at the same time the House is trying to curb the agency’s reach.

Withdrawals from the accounts could be used for books and supplies, home computers, software, transportation and tutoring — as well as tuition for private or religious schools.