[Congressional Record Volume 141, Number 57 (Tuesday, March 28, 1995)]
[Extensions of Remarks]
[Page E708]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


               THE TUITION ACCOUNT ASSISTANCE ACT OF 1995

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                           HON. PHIL ENGLISH

                            of pennsylvania

                    in the house of representatives

                         Tuesday, March 28, 1995
  Mr. ENGLISH of Pennsylvania. Mr. Speaker, today I am introducing the 
Tuition Account Assistance Act of 1995. It is my sincere hope that this 
legislation will help clarify the middle-class benefits of capital 
gains tax reduction.
  This legislation would enable parents or guardians to save for their 
children's education through a State college tuition-savings program 
without tax penalties. This legislation would also encourage States to 
adopt tuition savings programs if they do not currently have them, and 
States who do would benefit from an additional incentive for 
participation. It is time to quite penalizing families who are trying 
to save for their children's education.
  In September, 1993, my home State of Pennsylvania started a program 
to provide for the advance purchase of college tuition credits. Tuition 
credit prices are set annually based on current tuition prices, 
expected tuition inflation and the expected earnings of the fund. The 
program allows the credits to be used anytime after they mature. 
Unfortunately, any increase in the value of the credits are subject to 
Federal income taxation. The purchaser will incur a tax liability when 
the credits are used, or in the event of a refund.
  While Pennsylvania's program is new and participants are not yet able 
to use the credits, when they do, they will be met with a huge tax 
burden. Other States who have this type of program are all too familiar 
with the disincentive this liability is to the program, and States who 
are contemplating starting a program are thinking twice.
  For these important reasons, I am pleased to offer this bill to the 
House.


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