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A procedural ruling from Senate Parliamentarian Elizabeth MacDonough has significantly delayed two pillars of the GOP’s school-choice and tax reform agenda: a $4 billion annual private‑school scholarship tax credit, and a religious‑college exemption from expanded federal endowment taxes. Both provisions have been deemed to violate the Senate’s Byrd Rule, requiring the Senate to muster 60 votes for passage—halting a party-line reconciliation strategy .
Proposal Deep Dive
1. Private‑School Tax Credit:
Modeled on the Educational Choice for Children Act, this proposal would offer up to $4 billion annually in tax credits to individuals donating to scholarship funds—serving students in households earning up to 300% of local median income. Over 2025–2034, it’s estimated to cost $26.046 billion .
2. Religious‑College Carve‑Out:
Republicans sought to exempt institutions like Hillsdale College from an upswing in federal endowment taxes—potentially shielding them from an increase to an 8% levy on investment income.
Byrd Rule Barrier
The Byrd Rule restricts reconciliation content to measures with direct budgetary impact and prohibits provisions considered merely incidental. Parliamentarian MacDonough ruled both key proposals violate these standards, mandating a 60-vote threshold to pass—an unlikely prospect in the current split Senate.
Broader Implications
- Reconciliation Limits:
This marks a setback to the use of budget reconciliation for controversial ideological reforms—especially for cultural measures like education funding and religious tax privileges. - Legislative Strategy Shift:
GOP senators must now deliberate whether to reshape their proposals to comply with Byrd Rule constraints or abandon them entirely. - Policy and Equity Concerns:
Critics decry the tax credit as diversion of public funds to private and religious education, challenging equity and church-state separation. The religious carve-out raises questions about preferential tax treatment under federal policy.
With the Byrd Rule halting these major GOP tax initiatives, the Senate faces consequential strategic decisions. Will Republicans attempt to repackage these proposals within reconciliation constraints or pivot toward bipartisan solutions? The answers could influence the federal role in education funding and religious institution taxation for years to come.
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