Baker: Give Schools State Tax Windfalls

Treasury Secretary James A. Baker III said today that states should use some of the windfall revenues they will receive from the federal income tax overhaul to support education.

Speaking to members of the National Newspaper Assn., Baker said that the major overhaul of the tax law passed by Congress last year will substantially boost revenues for about 32 states that tie their own tax collections to the federal tax forms.

“We would like to see them spend a lot more of that (windfall) on education,” Baker said in a response to a question.

Baker linked the Administration’s program to increase the competitiveness of U.S. corporations to improvements in education. President Reagan’s program to boost competitiveness has been criticized because the Administration at the same time is proposing substantial cutbacks in federal aid to education.

More Money Not Solution

But as he has done in the past, Baker said that the solution to the country’s education problems should not come from throwing more federal funds at the problem. He noted that 93% of money for public education comes from state and local governments.

He said that Japan, “our chief international competitor,” graduates 90% of its students from high school while U.S. high schools have a 75% graduation rate.

“I do not believe we Americans have demanded enough of our young people or of our schools,” Baker said. “Nearly every Japanese teen-ager can read and write, while thousands of U.S. high school graduates cannot pass a basic literacy test.”

Baker, asked about progress in solving the Brazilian debt crisis, said he believes that the Latin American country wants to solve its current debt problems in a “non-confrontational way.”

Last month, Brazil, which owes foreign creditors $108 billion, the biggest debt in the developing world, suspended interest payments on the $70 billion of that amount owed to commercial banks because it was running out of dollar reserves.