Coalition Supports Expansion of Education Tax Credit Access

September 26, 2019

The Honorable Chris Van Hollen
United States Senate
110 Hart Senate Office Building
Washington, D.C. 20002

The Honorable Danny K. Davis
United States House of Representatives
2159 Rayburn House Office Building
Washington, D.C. 20515

The Honorable Rob Portman
United States Senate
448 Russell Senate Office Building
Washington, D.C. 20002

The Honorable David Schweikert
United States House of Representatives
1526 Longworth House Office Building
Washington, D.C. 20515

RE: Letter of Support for the ED ACCESS Act of 2019

Dear Senators Van Hollen and Portman and Representatives Davis and Schweikert,

We write to express our support for the Eliminating Discrimination and Creating Corridors to Expand Student Success (ED ACCESS) Act of 2019, which would remove the lifetime ban on the American Opportunity Tax Credit for individuals convicted of a drug felony. Since 1998, individuals have been able to claim a portion of qualified tuition, fees, and course materials paid for themselves if eligible, or for an eligible student, in the form of a federal tax credit for the first four years of higher education. However, individuals convicted of a state or federal drug felony have been barred for life from claiming this federal tax credit.

Congress enacted the HOPE Scholarship Tax Credit in 1998, which included the drug felony ban. In 2009, Congress reformed this tax credit and renamed it the American Opportunity Tax Credit (AOTC) but retained the drug felony ban.

More than twenty years ago, when Congress first enacted what would become the AOTC, it was believed that forms of punishment like the drug felony ban would reduce demand and supply for illegal drugs. We now know that imposing these kinds of barriers only jeopardizes those with a prior drug felony's ability to succeed.

For individuals seeking to rebuild their lives following a conviction, education is one of the most valuable tools. Research shows that the more education an individual obtains, the less likely they are to be incarcerated.¹ For the tax code to arbitrarily discriminate against those with a felony drug conviction is nonsensical. It is also inappropriate to address drug policy in the tax code.

The drug felony ban simply amounts to duplicative punishment for individuals who have already paid a debt through prison time, fines, probation, or rehabilitation programs. The ban also disproportionately affects people of color. Although no more likely to use drugs than other students,² African Americans are more likely to be convicted of a felony drug law violation³ that renders one ineligible for the AOTC.

The felony ban also creates confusion that likely deters taxpayers from claiming the AOTC even when eligible. For instance, millions of people across the country are arrested annually for violations of drug laws that vary by state. Possession or distribution of a drug in one state may be a felony while it's a misdemeanor in another state.⁴ Removing the felony ban will make the AOTC fairer, simpler and more effective.

Exclusions to AOTC eligibility do not exist for any other class of crimes. The ED ACCESS Act would simply strike the felony drug offense exclusion from the code in 26 U.S.C. 25A(b)(2)(D) to equalize the law. Thankfully, there is precedent for doing so. The exclusion would have been repealed in a larger reform of education tax credits in the Student and Family Tax Simplification Act, which passed the House in 2013 with bipartisan support.

Congress should remove arbitrary barriers like the American Opportunity Tax Credit drug felony ban that could impede the success of individuals who are seeking to improve their lives and equalize the treatment of this form of tax-based federal student aid.

Sincerely,

American Conservative Union

Americans for Tax Reform

Campaign for Liberty

Center for Law and Social Policy (CLASP)

Center for Worker Freedom

College & Community Fellowship

CURE (Citizens United for Rehabilitation of Errants)

Digital Liberty

Drug Policy Alliance

FreedomWorks

Health in Justice Action Lab, Northeastern University School of Law

Justice Action Network

Justice Roundtable

Legal Action Center

Operation Restoration

NAACP

National Association of Criminal Defense Lawyers

National Association of Social Workers

National HIRE Network

National LGBTQ Task Force Action Fund

Prison Fellowship

R Street Institute

Safer Foundation

Students for Sensible Drug Policy

CC:
Senator Jeff Merkley; Senator Ron Wyden; Senator Susan Collins; Senator James Lankford

Representative Steven Horsford; Representative Brad Wenstrup; Representative Terri Sewell; Representative Kenny Marchant