The Choice Channel

“The tax code has always allowed various deductions and credits for investment in physical capital. But there have been few incentives to make comparable investments in human capital - expanding the productive capacity of human beings. In a step toward rectifying this discrepancy, the tax law passed last summer allows a child’s parents or others to set up an education savings account (ESA) to help pay tuition and other expenses at a public or private college. While contributions to ESAs are not tax-deductible, the interest earned accumulates tax free and withdrawals for education expenses are not taxed.” (10/97)