[Congressional Record Volume 147, Number 30 (Thursday, March 8, 2001)]
[Senate]
[Pages S2078-S2079]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH.
  S. 495. A bill to amend the Internal Revenue Code of 1986 to allow an 
above-the-line deduction for certain professional development expenses 
and classroom supplies of elementary and secondary school teachers; to 
the Committee on Finance.
  Mr. HATCH. Mr. President, I rise today to introduce legislation 
designed to increase tax fairness for America's primary and secondary 
school teachers.
  Over the past few years, much has been said about the inequities of 
some of the provisions of the Internal Revenue Code. Indeed, one does 
not need to look very far in the Code to begin to see provisions that 
are just plain unfair. I would like to highlight just one egregious 
example of this unfairness today, and introduce legislation to begin to 
rectify it.
  Mr. President, our public school teachers are some of the unheralded 
heroes of our society. These women and men dedicate their careers to 
educating the young people of America. School teachers labor in often 
difficult and even dangerous circumstances. In most places, including 
in my home state of Utah, the salary of the average public school 
teacher is significantly below that of other similarly educated and 
experienced professionals in our society.
  Moreover, school teachers find themselves further disadvantaged by 
unfair treatment from the tax code as to the deductibility of 
professional development expenses and of the out-of-pocket costs of 
classroom materials that practically all teachers find themselves 
supplying. Let me explain.
  Like many other professionals, most elementary and secondary school 
teachers regularly incur expenses to keep themselves current in their 
field of knowledge. These include subscriptions to journals and other 
periodicals as well as the cost of courses and seminars designed to 
improve their knowledge or teaching skills. These expenditures are 
necessary to keep our teachers up to date on the latest ideas, 
techniques, and trends so that they can provide our children with the 
best education possible.
  Furthermore, almost all teachers find themselves providing basic 
classroom materials for their students. Because of tight education 
budgets, most schools do not provide 100 percent of the material 
teachers need to adequately present their lessons. As a result, 
dedicated teachers incur personal expenses for copies, art supplies, 
books, puzzles and games, paper, pencils, and countless other needs. If 
not for the willingness of teachers to purchase these supplies 
themselves, many students would simply go without needed materials.
  I realize that many employees incur expenses for professional 
development and out-of-pocket expenses. In many cases, however, these 
costs are fully reimbursed by the employer. This is seldom the case 
with school teachers. Other professionals who are self-employed are 
able to fully deduct these types of expenses.
  Under the current tax law, unreimbursed employee expenses are 
deductible, as miscellaneous itemized deductions. However, there are 
two practical hurdles that effectively make these expenses non-
deductible for most teachers. The first hurdle is that the total amount 
of a taxpayer's deductible miscellaneous deductions must exceed 2 
percent of adjusted gross income before they begin to be deductible. 
The second hurdle is that the amount in excess of the 2 percent floor, 
if any, combined with all other deductions the taxpayer has, must 
exceed the standard deduction before the teacher can itemize. Only 
about 30 percent of taxpayers have enough deductions to itemize. The 
unfortunate effect of these two limitations is that, as a practical 
matter, only a small proportion of teachers are able to deduct these 
expenses.
  Let me illustrate this unfair situation with an example. Let us 
consider the case of a fifth-year high school chemistry teacher in Utah 
who I will call Wendy Ruffner. Wendy is single

[[Page S2079]]

and earns $35,000 per year. Last year she incurred $750 in expenses for 
chemistry periodicals and for a course she took over the summer to 
increase her knowledge of chemistry. Wendy also incurred $100 in out-
of-pocket expenses for classroom supplies such as copies, periodical 
charts, and equipment for classroom experiments.
  Under current law, Wendy's expenditures are deductible, subject to 
the limitations I mentioned. The first limitation is that her expenses 
must exceed 2 percent of her income before they begin to be deductible. 
Two percent of $35,000 is $700. Thus only $140 of her $840 total 
expenses is deductible, that portion that exceeds $700.
  As a single taxpayer, Wendy's standard deduction for 2000 is $4,400. 
Her total itemized deductions, including the $140 miscellaneous 
deduction for professional expenses, fall short of the standard 
deduction threshold. Therefore, not even the $140 of the original $840 
in professional expenses is deductible for Wendy. What the first 
limitation did not block, the second one did.
  The legislation I introduce today, the Tax Equity for School 
Teachers, or TEST Act, would eliminate the unfairness teachers face in 
regards to these limitations by making all professional development and 
out-of-pocket expenses an above-the-line deduction. This means a 
teacher could deduct these expenses without regard to the 2 percent of 
AGI limitation and whether he or she itemizes or not.
  Let us return to my previous example of Wendy Ruffner. Under this 
bill, Wendy would be allowed to deduct all $840 of her professional 
expenses from her taxable income. This would help provide tax equity, 
and a measure of much-needed tax relief for an underpaid professional.
  Some might argue that this would be giving teachers preferential 
treatment. I disagree. Most organizations provide training for their 
employees that is fully deductible to the organization and non-taxable 
to the employee. Yet, public teachers, who are some of the most vital 
professionals in our society, are left to foot the bill on their own. 
Office supplies and instructional materials are also fully deductible 
to businesses. Shouldn't teachers who provide these similar materials 
for their classrooms be afforded the same tax treatment?
  School teachers deserve better tax treatment than what they receive. 
With the low pay teachers typically receive, it is no wonder that many 
areas of the country are facing severe shortages of experienced 
teachers. The tax code is compounding the problem by adding insult to 
injury. We need to remove the unfair disincentives that discourage 
motivated and qualified individuals from pursuing teaching as a 
profession.
  I note that President Bush's tax cut plan also recognizes this need 
and provides for a deduction of up to $400 in teachers' out-of-pocket 
classroom expenses. This is a good step in the right direction. My 
bill, however, provides an unlimited deduction for out-of-pocket 
expenses and goes further and also includes the costs of professional 
development expenses. I do not believe we need to place a limit on 
these deductions. Teachers are going to provide their students with 
materials and take the professional development courses regardless of a 
tax deduction. They should be able to deduct these expenditures.
  Mr. President, this bill would provide modest tax equity for teachers 
who, for too long, have been footing the bill for improving the quality 
of teaching by themselves. It is time we the tax code recognized this 
unfairness and corrected it. I thank the Senate for the opportunity to 
address this issue today, and I urge my colleagues to support this 
legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 495

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Tax Equity for School 
     Teachers Act of 2001''.

     SEC. 2. DEDUCTION FOR CERTAIN PROFESSIONAL DEVELOPMENT 
                   EXPENSES AND CLASSROOM SUPPLIES OF ELEMENTARY 
                   AND SECONDARY SCHOOL TEACHERS.

       (a) Deduction Allowed Whether or Not Taxpayer Itemizes 
     Other Deductions.--Subsection (a)(2) of section 62 of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by adding at the end the following new 
     subparagraph:
       ``(D) Certain professional development expenses and 
     classroom supplies for teachers.--The deductions allowed by 
     section 162 which consist of qualified professional 
     development expenses and qualified elementary and secondary 
     education expenses paid or incurred by an eligible 
     teacher.''.
       (b) Definitions.--Section 62 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subsection:
       ``(d) Qualified Expenses of Eligible Teachers.--For 
     purposes of subsection (a)(2)(D)--
       ``(1) Qualified professional development expenses.--
       ``(A) In general.--The term `qualified professional 
     development expenses' means expenses for tuition, fees, 
     books, supplies, equipment, and transportation required for 
     the enrollment or attendance of an individual in a qualified 
     course of instruction.
       ``(B) Qualified course of instruction.--The term `qualified 
     course of instruction' means a course of instruction which--
       ``(i) is--

       ``(I) directly related to the curriculum and academic 
     subjects in which an eligible teacher provides instruction, 
     or
       ``(II) designed to enhance the ability of an eligible 
     teacher to understand and use State standards for the 
     academic subjects in which such teacher provides instruction,

       ``(ii) may--

       ``(I) provide instruction in how to teach children with 
     different learning styles, particularly children with 
     disabilities and children with special learning needs 
     (including children who are gifted and talented), or
       ``(II) provide instruction in how best to discipline 
     children in the classroom and identify early and appropriate 
     interventions to help children described in subclause (I) to 
     learn,

       ``(iii) is tied to challenging State or local content 
     standards and student performance standards,
       ``(iv) is tied to strategies and programs that demonstrate 
     effectiveness in increasing student academic achievement and 
     student performance, or substantially increasing the 
     knowledge and teaching skills of an eligible teacher, and
       ``(v) is part of a program of professional development 
     which is approved and certified by the appropriate local 
     educational agency as furthering the goals of the preceding 
     clauses.
       ``(C) Local educational agency.--The term `local 
     educational agency' has the meaning given such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965, as in effect on the date of the enactment of this 
     subsection.
       ``(2) Qualified elementary and secondary education 
     expenses.--The term `qualified elementary and secondary 
     education expenses' means expenses for any taxable year for 
     books, supplies (other than nonathletic supplies for courses 
     of instruction in health or physical education), computer 
     equipment (including related software and services) and other 
     equipment, and supplementary materials used by an eligible 
     teacher in the classroom.
       ``(3) Eligible teacher.--
       ``(A) In general.--The term `eligible teacher' means an 
     individual who is a kindergarten through grade 12 classroom 
     teacher, instructor, counselor, aide, or principal in an 
     elementary or secondary school on a full-time basis for an 
     academic year ending during a taxable year.
       ``(B) Elementary or secondary school.--The term `elementary 
     or secondary school' means any school which provides 
     elementary education or secondary education (through grade 
     12), as determined under State law.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                                 ______