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Heritage Foundation
Credit Where
Credit Is Due: Leave Tuition Tax Credit Scholarship Options to the
States
Lindsey Burke
February 21, 2017
The Trump administration is reportedly considering working with
Congress to establish a federal tuition tax credit scholarship program.
Such tuition tax credit scholarship programs make sense at the state
level, and have worked well and grown in popularity over the past
decade. They are now in operation in some 17 states throughout the
country. But the policy is and should remain at the state level, and
the administration should pursue better options for advancing education
choice through federal policy.
According to Politico, the administration’s proposal could mirror a
bill introduced last Congress by Sen. Marco Rubio, R-Fla., and Rep.
Todd Rokita, R-Ind., which would provide a credit toward federal tax
obligations of up to $4,500 for individuals and up to $100,000 for
corporations that make donations to nonprofit scholarship granting
organizations. These organizations, in turn, would provide a
scholarship to an eligible low-income child to attend a private school
of choice.
A federal tuition tax credit scholarship program would create myriad
problems. Fundamentally, education choice policy should represent a
redirection of the financing of education based on sound principles.
Furthering federal entanglement in the funding of education through new
federal programs would be unsound and would come at the expense of
state, local, and parent decision-making.
At the same time, the federal tax code is not the appropriate lever for
establishing a tuition tax credit scholarship program because, unlike
at the state level, where states have a state constitutional mandate to
provide each child with an education, the federal Constitution has no
such provision.
A federal program opens the door to regulating private schools by
prescribing the types of scholarship granting organizations donors can
contribute to, and by regulating these organizations to ensure only
schools deemed acceptable according to federal standards can
participate.
As University of Arkansas professor Jay Greene has noted, Americans
prize a federalist system—in which policies are set by states and
localities—because each state can tailor policy to its needs and try
different approaches, see what works, and then adjust accordingly.
Enacting a national program excludes this sort of policy
experimentation and innovation.
Moreover, a federal tuition tax credit scholarship program could
homogenize state tuition tax credit scholarship programs, limiting
their ability to be mission-specific, and reducing the diversity of
options available to families.
Proponents of the federal program argue, in part, that by incentivizing
states to establish scholarship granting organizations and participate
in the federal program, a federal tuition tax credit scholarship could
create choice options in states where union domination has thwarted
school choice efforts in the past.
But to achieve this goal, such a proposal would have to include one of
two equally problematic provisions: It would either have to require
states to establish their own scholarship granting organizations to
participate, or it would have to create a similar federal organization.
Federal inducements to create new state-level scholarship granting
organizations will likely come with mandates that those organizations
aren’t school- or sector-specific; that is, it could preclude donors
from receiving a federal tax credit if they give to scholarship
granting organizations that are mission-specific and work with schools
of a specific education viewpoint or particular religious affiliation.
Establishing a federal scholarship granting organization is outside the
scope of federal authority, and could put pressure on existing state
organizations to conform to the federal model in order to participate.
President Donald Trump has rightly said he wants “every single
disadvantaged child in America, no matter what their background or
where they live, to have a choice about where they go to school.”
With conservative leadership at the helm in a record 68 percent of
state legislatures, and with conservatives controlling both legislative
chambers and the governorship in 24 states, there is an unprecedented
opportunity to advance education choice.
States like Texas, Arkansas, New Hampshire, and Arizona, to name a few,
are currently working to create universal education savings accounts
(ESAs) for students, massively accelerating the school choice
revolution.
Although primarily a state focus, there are steps that the
administration can take, working in conjunction with Congress, to
advance education choice from the federal perch. That includes
reauthorization and expansion of the D.C. Opportunity Scholarship
Program, which provides vouchers to children from low-income families
living in the nation’s capital.
The administration can work to create more choices for military
families, and it can create options for Native American children
attending Bureau of Indian Education schools—identified as the worst
performing schools in the country—by converting federal funding into
education savings accounts.
These federal policy reforms would be a huge boon for education choice.
Let’s let states and localities continue to take it from there.
Read this and other articles at The Daily Signal
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