Education Costs: A Hidden Tax on the Middle Class

Most people don't realize what their tax burden actually is. This one is about the non-deductibility of your education expenses.

Most middle class employees in the United States work in jobs that require a post high school degree. These degrees are quite expensive, but we are willing to pay it anyway. We believe that the expense will pay off during our career, just the way and entrepreneur sinks money into a new business expecting the investment to pay off. Except that the entrepreneur's investment is fully deductible for income tax purposes, but your education expenses are not!

You may only deduct the interest portion of your education loans IF your income is below $50,000-60,000. The principle is deductible only up to ($4,000) only in the year it is paid (or borrowed). Most students have little to no income during those years, so the deduction is lost. You cannot "capitalize" and "amortize" the cost in future years the way an entrepreneur or a business does.

This is another example of the inevitable inequities that arise when government chooses to tax people based on income.