School choice: education tax credits

School Choice is becoming the most popular education reform idea, but not all school choice is created equal. The most powerful kinds allow parents to choose any school—public, independent, or religious. Most of the time, vouchers are what people think of when we are talking about this type of full-fledged choice. Yet, there is another policy that increasingly has been successful in recent years: education tax credits.

Vouchers essentially are checks that the state sends parents to use at schools that the government deems are voucher-worthy. Tax credits, though, reduce the amount a taxpayer owes the government for each dollar he or she spends on a child’s education. Moreover, tax credits for donations to scholarship organizations can help support school choice for lower-income families, and personal-use credits can help middle- class families. For instance, if a business owes the state $4,000 and donates $4,000 to a scholarshipgranting organization, it would pay nothing in taxes. Similar benefits for donations can be applied to individuals.

Three states have modest forms of personal-use tax credits: Illinois allows families to claim credits worth 25% of their educational expenses, up to $2,500; Iowa allows 25%, up to $1,000; and Minnesota allows 75% of nontuition expenses, up to a maximum credit of $1,000 per child. Five states— Arizona, Florida, Iowa, Pennsylvania, and Rhode Island— have more powerful donation credits. Pennsylvania allows a 90% credit for donations and Florida a 100% credit, helping thousands of children from lower- income families attend good, independent schools.

Education tax credits are a more powerful and bipartisan “third way” school choice reform that promises to spread educational freedom across the country. They are the future of school choice for five reasons:

Education tax credits are more popular than vouchers. Surveys generally demonstrate that tax credits command five to 10% more support than do vouchers. A large academic poll conducted for the magazine Education Next and the Program on Education Policy and Governance at Harvard University illustrates the remarkable wide support for tax credits. Even current and former public school employees favor them by a margin of nearly two to one; public school employees oppose vouchers by a two-point margin.

[more from Adam B. Schaeffer]

I don’t care if its tax credits or vouchers — what is essential is that the financial offset be equal to the state’s average per pupil cost — a 100% offset. What do you think is the chance of such reforms if the U.S. has a president Clinton or Obama?