Friday, November 16, 2007

Education Tax Credits Follow-Up

A couple of months ago I posted about how to fund school choice. I specifically mentioned a four-part series (1, 2, 3, 4) by Adam B. Schaeffer of the CATO Institute. Schaeffer argued that vouchers were not the best tool for school choice and showed why he believed that education tax credits were the best way to go.

In my post, I questioned how much education tax credits could help poor families.
“While allowing businesses to offer scholarships probably answers some of this, tax credits seem to favor those that pay more taxes, which happens to be those that make more money. A tax credit of up to $4000, for example, wouldn’t be very helpful in paying for private schooling if your total state tax assessment (and therefore your total credit) amounts to $400. And if you’ve got three or four kids, the disparity only gets worse. Schaeffer seems to completely ignore this problem.”

A couple of days ago, I was surprised to receive a personal email from Schaeffer, where he said:
“I just wanted to write you about your primary concern about tax credits, that they cannot serve lower-income families sufficiently. I see that I should emphasize this more in the future, but donation tax credits are fully capable of supporting lower-income children and help those on the margin in terms of income by supplementing their personal tax credits. These donation credit programs have been the most popular in recent years . . . PA has a fairly large program that helps thousands of low-income children. If the programs weren’t capped at such low amounts, they would be able to cover all children who need the support.”

I very much appreciate Schaeffer taking time to personally write me to address this issue.

2 comments:

y-intercept said...

Unfortunately, tax credits for private education will not happen. As you mentioned in a previous post: there is a finality to general elections. Utah is now stuck with the Mc-Public Schools that unimaginative Utah voter seems to prefer.

This is the problem with referendums. The votes lock people into systems that they cannot change.

Scott Hinrichs said...

I do have to say that I have been amused by all the chummy talk following the election about coming together to improve education and sing Kum-by-Yah. There hasn't been as much gloating as I had imagined, but it also wasn't necessary. Everyone knows what the election meant.