Learning from Others: Education Tax Credits are a Win-Win

This fall, Tyleur, an upbeat high school freshman, became the first member of her family to attend a private school. One-time prize money is funding her first year at a private school in Portland. However, next year she may be forced needlessly to rejoin the many Oregon children who cannot afford to attend the school of their choice.

This year, Tyleur’s family is saving Oregon taxpayers thousands of dollars by choosing a private school. In fact, the average public school in Oregon spends about as much per student as the cost of her tuition at the private school she currently attends (about $10,000). Yet, her family will not even receive a tax break to help keep her in the school of her choice. They are not alone.

Forty-four percent of Oregon parents would choose a private school if they could afford it, but few can. It doesn’t have to be that way. Simple legislation that has saved other states millions of dollars, while restoring power to parents and taxpayers, has brought hope to thousands of families in other states.

Florida’s Corporate Income Tax Credit Scholarship program is one example of the kind of legislation that has empowered parents and changed lives. In 2001, the Florida Legislature created the tax credit to increase educational opportunities for low-income students. The program offers corporations tax credits (not to exceed 75% of their state income tax liability) for donations to scholarship programs for low-income K-12 students. Scholarships are capped at just under $4,000, but still supported about 23,000 students in the 2007-2008 school year to attend the private schools their parents chose.

Imagine the hope a parent experiences when she suddenly has the power to shop around and pick the school that best suits her child’s needs! Research has suggested that parents become more involved in their child’s education when they acquire purchasing power through opportunity scholarships or vouchers because they feel greater control over the outcome.

Florida’s tax credit scholarship program also has saved taxpayers money. In December 2008, a government agency, Florida’s Office of Program Policy Analysis and Government Accountability, evaluated the scholarship program. It concluded that in Fiscal Year 2007-08 “taxpayers saved $1.49 in state education funding for every dollar loss in corporate income tax revenue due to credits for scholarship contributions. Expanding the cap on tax credits would produce additional savings if there is a sufficient demand for the scholarships.” Florida netted $38.9 million in savings from the program in 2007-08 alone.

Likewise, many other major existing state programs that increase parental school choice have either saved states money or had no net impact on the state coffer. Oregon could join these states in their savings by creating similar opportunities for families to pick their schools. Such savings could even help to thwart the impending state budget crisis. Or, we can continue to settle for the status quo that leaves most families with few, if any, options.

Christina Martin is a policy analyst for the School Choice Project at Cascade Policy Institute, Oregon’s free market public policy research organization.

  • Jerry

    An excellent idea. Only it is not a large enough credit. It should be doubled.

  • TryAgainBubba

    Not so fast Ms. Free Marketeer. Tuition tax credits actually cost the taxpayers more than they save. You see, everywhere they’ve been tried, they actually help very few students switch from public to private school. Most of the subsidies got to families whose kids were already in private school, making them a 100% drain on state revenue. That means the rest of us have to pay more to pick up the slack, or suffer reduced services so somebody else can get fat on the public teat.

    Furthermore, I know readers will be shocked to hear that when millions of doallrs in free money is involved, charlatans come out of the woodwork to feed. Donations get collected, but somehow don’t get turned into vouchers. “Scholarship granting organizations” use the donations to pay themselves extravagant salaries, charge above-market rent, hire family members to administer the program, and otherwise scam the public.

    Finally, with little or no public accountability, the good taxpayers who are footing the cost of this program have no idea if the teachers whose salaries they’re subsidizing are qualified, or if the private schools they’re paying for are teaching a curriculum that is preparing our children to succeed in a multicultural, global, high tech economy. I understand the libertarians in the crowd may claim that the parents provide all the accountability that’s needed, but I also know that every one of us can think of a dozen parents we wouldn’t trust with that responsibility.

    No thanks, Christina. I’d rather take my chances improving the public schools we’ve got than send my hard-earned money down a private school voucher rathole.

    • Rupert in Springfield

      Sounds like a lot of allegations without much evidence from someone who has more of an interest in forcing parents to conform rather than allowing them the options they clearly desire.

      If parents leave the public school system and it saves the system money, who could object other than someone whose interest lies more in totalitarian desires rather than education.

      • TryAgainBubba

        Rupert, you either misread what I wrote or choose to misrepresent it. I don’t care where parents send their kids to school, or even if they homeschool. What I care about is when they ask me to subsidize their choices. My preference is to support a system over which I exercise some control, via the people I elect to run the show, the rules and regualtions they’re supposed to follow, and sunshine laws that let me see the budget and board meetings. I don’t get that when they take *MY* money to private school.

        You say “who could object” if the program saves the system money, and chastise me for failing to provide evidence. These scams do not save taxpayers a dollar, and the folks who foisted them on the taxpayers of Arizona now admit that they’re tax credits for the wealthy. Bah!

  • v person

    I am a complete idiot .

  • forex robot

    Keep posting stuff like this i really like it.