| ||Bad Drafting—A Case Study of the Design and Implementation of the Income Tax Subsidies for Education|
Glenn E. Coven*
* Godwin Professor of Law, College of William and Mary School of Law; Swarthmore College, B.A., 1963; Columbia Law School, J.D., 1966. The author wishes to thank Joshua Herbst, his research assistant, for his assistance in preparing this article.
For decades the writers of tax legislation steadfastly ignored the burden on the typical American family due to the skyrocketing costs of higher education. In 1997, however, the dam suddenly burst and out tumbled a ragtag collection of provisions designed to give the appearance, if not the reality, of tax relief for students and their families. These rules included the somewhat deceptively named Hope Scholarship Credit and the Lifetime Learning Credit, both provided by Code section 25A; the resurrection of the ability to deduct interest on educational loans under section 221; the misnamed Educational Individual Retirement Accounts (EIRAs) created by section 530; and a mishmash of other rules, including the favorable treatment of certain prepaid tuition plans. These new rules are poorly designed and poorly drafted. While they add a measure of needed tax relief for the costs of education, they also add an infuriating measure of complexity to the preparation of income tax returns for a broad range of taxpayers whose returns otherwise tend to be relatively uncomplicated.
What went wrong? Unfortunately for students and their families, the attempt to subsidize the costs of higher education finally bore fruit during an era in which the ability of Congress and its tax writing staff to produce coherent legislation had reached an all time low. A devil’s brew of political conflict and constraint, inexperience, and perhaps downright contempt for the history and purposes of the law being amended has left Congress all too frequently unable to transform the simplest ideas into workable statutory language. While the educational assistance provisions may not be the most glaring example of the qualitative erosion of the Internal Revenue Code, they are some of the most instructive to examine. The adverse consequences of the prevailing drafting practices are plainly visible in these new provisions.
The new rules governing the principal education assistance provisions, EIRAs, and tuition tax credits are examined in the following pages with particular reference to the failures of design and drafting that permeate these provisions. The purpose of this undertaking is to do more than merely explain these new rules and occasionally grumble about their drafting inadequacies. To the contrary, the premise of this article is that these provisions are really poorly drafted and the resulting deterioration in the quality of the taxation statute results in unacceptable costs. If any improvement in the drafting of tax legislation is possible, it will require far more than the private grousing that is currently popular. Rather, it will require some very public grousing accompanied by some very specific objections, which will be the task undertaken here.