Quoting Assemblywoman Suzette Martinez Valladares, “Nothing defines our future more than our investment in our kids. We must empower parents with choices.” (Signal column April 29). I agree and a big step in that direction would be passing an Assembly bill to provide a tax credit or deduction for contributions to California’s 529 plan, ScholarShare.
California is only one of five states that do not provide a tax credit or deduction for their state’s 529 plan. People living paycheck to paycheck might open a 529 plan for their child, making a small contribution each payday through automatic payroll deduction, if they could recover part of their contributions as state income tax savings at tax time.
Gov. Gavin Newsom boasts that California leads the nation, but he alone is responsible for California’s backward failure to provide a 529 plan contribution tax break. In 2019 the California Legislature passed a bill authorizing a contribution tax deduction; Newsom vetoed the bill, advocating instead a taxpayer-funded scholarship program of limited scope. Given California’s huge tax surplus, why couldn’t we have done both? Remember Newsom’s action when voting for governor this fall.
ScholarShare contributions grow tax-free and are not taxed when withdrawn for college or occupational training. Anyone can contribute: parents, grandparents, aunts, uncles or friends. There are lots of different investment choices, from low-risk to high-risk.
Complete information about California’s 529 plan can be found at scholarshare529.com. The 529 plans are the cure for politicians’ crocodile tears over “crushing” student debt..