Math degree not required to understand private school tax credits save money

Posted on April 07, 2009 | Author: Thomas C. Patterson
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The long knives are out for Arizona's education tax credits. Big spenders in state government, who created our current deficit and normally can't think of a single spending reduction that wouldn't plunge us into third-world status, have a bright idea: eliminate tax credits for both public and private schools.

But abolishing the tuition tax credit for private school students wouldn't save money--it would make the deficit worse.

Scholarships financed by tax credit donations average around $2,000. Meanwhile, the state appropriates about $6,500 for each public school student. (The funding from all sources is over $9,000, but that's a different matter.) If the state no longer agrees to forgo $2,000 per student in tax credits but instead pays $6,500 per student--you don't have to be a math major to see the problem.

Critics of school choice see the budget crisis as another chance to attack a major school choice program. But they're using a sleight of hand, conflating tuition tax credits for private schools with the public school tax credits for extra-curricular activities. Once the bundling is completed, they claim both should be sacrificed for fiscal reasons.

But there's a night-and-day difference between the tax credits. Only one saves money. There have been problems with the public school credits from the start. Suburban school districts like Mesa and Scottsdale recruit millions yearly in contributions, while inner city districts lag behind. By law the funds must be used for extra-curricular activities, which have included trips to Sea World, Catalina Island, and even abroad.

But the least defensible aspect of the public school tax credit is that the state receives no financial benefit from the forgone revenue of the public school credits. Unlike the tuition credits, per-pupil funding and the number of pupils in public school are unchanged by this tax credit. Tax credits for after school activities may be popular, but it's hard to justify in times of financial stress.
 
Tom Patterson is chairman of the Goldwater Institute and a former state senator.
 
Learn more:
 
Goldwater Institute: Urban legends about Arizona's scholarship tax credit
 
Goldwater Institute: Year end education wrap up
 
Goldwater Institute: Education Scholarships: Expanding Opportunities for Students, Saving Taxpayers Money

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