Home > Uncategorized > Education Tax Credits Save Taxpayers Money, Destroy Public Education

Education Tax Credits Save Taxpayers Money, Destroy Public Education

Late last month a Progressive article by Dora Taylor outlined four things about education tax credits (aka Education Savings Accounts in NH) that Betsy DeVos and her allies at ALEC do not want the public to understand. Marketed as a means of providing low income students with “scholarships” that enable them to enroll in private schools, they actually divert state funds to middle class parents who are already enrolled in parochial schools. Ms. Taylor opens the article with a description of how these tax credits work:

Education tax credits are similar to school vouchers. A voucher is money paid by the state to cover private school tuition for a student. Voucher money comes straight out of public school funds.

Vouchers are unconstitutional in eighteen states and one of the reasons is that the money can go to a religious school, crossing the line between church and state.

In a “scholarship tax credit program,” the money bypasses the state and instead goes through a go-between, a “scholarship granting organization” to a private school to pay a student’s tuition in full or in part. Typically, these organizations keep 10 percent of the money as they pass through funds to private schools.

A scholarship granting organization distributes money to students, who are purportedly “low income”, to attend a private school the organization has selected to include in its portfolio. Granting organizations can select the schools they do business with, whether they are religious schools or schools that are unaccredited.

While these groups have set a standard for “low income” —a family of four with an income of $64,750 or less—family income is not a determining factor for many of the students who receive the scholarships.

This convoluted system effectively replaces locally elected school boards with a state appointed scholarship granting board that determines schools worthy of scholarships and the eligibility of students who can attend those schools…. but this aspect of the law creating “education scholarships” is not part of the marketing campaign…. and that is intentional. After providing an overview of the tax credits, Ms. Taylor identifies four elements of education tax credits that Betsy DeVos and ALEC do NOT want the public to realize:

  1. Education Tax Credits Deplete State Budgets: Instead of providing additional resources to enable “poor” students to choose private schools to attend, ALEC’s boilerplate legislation diverts current education funding to these scholarship funds…. and that’s on top of revenue they lose when billionaires make tax-deductible donations to these scholarship funds, some of which might go to for-profit charter schools the self-same billionaires invest in!
  2. Education Tax Credit Programs Benefit the Wealthy: ALEC’s boilerplate legislation calls for donors to scholarship funds to effectively receive a subsidy for making a contribution. As Ms. Taylor reports, donors receive “a dollar-per-dollar write off on Federal taxes and, in some states, it can be used as an additional write-off on state taxes. With a donation to a scholarship grant-making organization, a person, company or corporation can benefit financially, sometimes doubling the tax write-off.” So a billionaire can “donate” a large sum to a scholarship fund and receive both a federal and a state deduction that offsets the donation… and a corporation that likely gets some kind of local tax-credit to locate or remain in a state similarly receives a tax credit at the federal and state level! And in both cases, the donors can claim they are helping disadvantaged children expand their opportunities. Also, as noted above, states can set a “low income” standard that is relatively high and thus enable middle class parents who are currently sending their children to a private school to qualify for a scholarship… even if that school is a parochial school (see #4). 
  3. Education Tax Credit Programs Pose Significant Risks to Children: Since the schools receiving scholarships are overseen by a non-public entities, they are not subject to federal or state standards. Thus schools receiving scholarships can discriminate, barring special needs students and permitting religious instruction… which leads to the fourth factor.
  4. Education Tax Credit Programs Divert Public Money to Religious Indoctrination: While there is evidence that Betsy DeVos wants to use her position to allow public funds to flow to schools with religious affiliations, I do not believe ALEC’s shares that intent. However I do believe the billionaires who underwrite ALEC appreciate the political clout they can garner if they develop programs that appeal to the evangelical base of the GOP. Thus, an essential element of all legislation is to permit public funds to flow to all private schools, including those operated by churches, synagogues, and mosques.

The marketing of “Education Tax Credits” is artful. What voter wouldn’t want to have more tax credits available to them? What voter could oppose giving parents and children more choices in terms of schooling? What voter could oppose a law that will augment state funds with donations from generous billionaires enabling funding for schools to increase without imposing higher taxes? And what voter would be willing to pay higher taxes to help poor kids in another part of the state when those kids will be able to qualify for scholarships funded by someone else? Advocates of funding equity, of public education governed by locally elected school boards, and of opportunities for all children have a steep uphill fight in the years ahead.

 

 

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