Rethinking the Tax Treatment of Higher Education Expenditures: An Argument for Cost Recovery Through Amortization Deductions

Abstract

In today’s rapidly evolving, technologically-focused economy, a higher education degree is a near-requirement in order to enter a professional field and earn a livable wage. As currently written, however, the Tax Code (the “Code”) disallows cost recovery for higher education expenditures in nearly all situations. The failure of the Code to allow cost recovery of higher education expenditures, while broadly allowing cost recovery of other expenditures, has ramifications for the equitable tax treatment of education costs and the long-term prospects of our economy. This Paper advocates for an amendment to the Code to allow partial cost recovery of higher education expenditures through phased-out amortization deductions.

Keywords: tax, education, deductibility, business

JEL Classification: K40