Editorial: Tax credits can invite lifelong learning

The thought came to state Rep. Erik Paulsen as he toured the Indian Institute of Technology in Delhi last fall: India has the economic advantage of an abundance of raw young technology talent. But Minnesota might be one of the best places on the planet for older workers to upgrade their skills -- especially if they get a little push.

What push? Paulsen proposes establishing a state tax credit to encourage workers to set aside money for college -- not for their children, but for themselves.

Paulsen, a seven-term Republican from Eden Prairie and former House majority leader, came home from India and found himself running for the Third District congressional seat, vacated by the unexpected retirement of U.S. Rep. Jim Ramstad. But campaigning for Congress hasn't kept Paulsen from promoting tax credits for nontraditional students. The idea is embodied in legislation that would create a new savings vehicle, Lifelong Learning Accounts. They ought to find their way into law this session.

The "little push" to set aside money would come both from employers and state government. An employee who establishes an account could get 50 percent of his or her annual contributions refunded, in the form of a state tax credit available even to those who don't owe state income tax. The refund would be capped annually at $500 for individuals and $1,000 for married couples filing jointly.

Paulsen's plan would also give employers an incentive to match employee contributions to Lifelong Learning Accounts -- a dollar-for-dollar tax credit of up to $500 per year, per employee.

That's intended to get more employers to follow the lead of IBM in Rochester. IBM's Valerie Pace said that beginning in July, its employees who put up to $1,000 per year into a learning account for their own college education can get up to a 50 percent match from the company.

"Our field is constantly changing. Worldwide, IBM is investing $600 million per year in employee education, and this is one part of it. We see this as an investment in our people," Pace said.

That's just as true for small employers as for multinational giants. But small firms might need the push of a state tax credit to decide they can afford to help employees go back to college.

Paulsen thinks his idea could catch on with other education-minded entities that might contribute to Lifelong Learning Accounts. Organized labor, foundations and educational institutions themselves could become Lifelong Learning Account contributors.

A recent report by the state Office of Higher Education suggests that too many Minnesotans drop out of college before completing their degrees. State tax credits for Lifelong Learning Accounts are one way for state policymakers to invite those who left college too soon to come back to campus.