Supporters say "Tax Credits are Different from Vouchers"

Education Tax Credit programs like the one in New Hampshire  came into use in response to court challenges to vouchers.  They have the advantage of appearing to be private money.  Advocates will insist that there is a real difference because private entities make the decision to grant money to a specific child.

As a practical matter, however, the two approaches are virtually identical.

The assertion that an Education Tax Credit is really a private money program rests on the assertion that tax credits are not really tax expenditures.  Here is our analysis of that argument. 

If you liked vouchers, you'll love Education Tax Credit funded scholarships

posted Jan 28, 2012, 8:15 PM by Bill Duncan   [ updated Jan 28, 2012, 8:28 PM ]

Who can be against a scholarship, something we normally associate with merit and achievement.  And tax credits for education, that sounds nice too.

Then there are all those court decisions limiting what you can do with public money.  With tax credit, you can say with a straight face that it's private money being contributed for scholarships - and the court agrees with you.

The problem is, if it really were just private money giving a charitable donation in the usual way, you would not need these complex bills to structure and regulate it and whole new state offices to administer it.  And you wouldn't get to take the money back into the state treasury if its left over at the end of the year.

And you would not need to structure the program so that the funds you take back from the school, overriding the stabilization grant that the legislature put in place, in order to off-set the tax expenditure you've given businesses to subsidize the scholarships.

If the Legislature really did reject the notion of "tax expenditure" and really did agree that tax credits did not "cost" the state anything, why is the whole revenue neutral discussion necessary to get it passed?

Tuition Tax Credits: Vouchers in Disguise, Rethinking Schools, 2003

posted Jan 28, 2012, 3:17 AM by Bill Duncan


Tuition Tax Credits: Vouchers in Disguise

Winter 2002/2003

By Barbara Miner


"There is definitely more momentum behind tuition tax credits," notes Matt Jacob, spokesperson for People for the American Way. "They have the same effect as vouchers, but they don't scare the public as much."

Or, as Joe Overton of the ultra-conservative Mackinac Center for Public Policy said in explaining why Michigan conservatives are focusing on tuition tax credits after that state's voucher referendum failed miserably in 2000: "In Michigan, the word 'voucher' is radioactive. Tax credits are much more politically viable."


Fundamentally, tuition tax credits are a way to use public policy to increase the money going to private schools and to relieve the financial burden on middle- and upper-income families with children already in private schools. "Tuition tax credits are an offshoot of the voucher concept," notes Marc Egan, director of the Voucher Strategy Center for the National School Boards Association. "They are an attempt to drain critical dollars from public schools. While vouchers are a direct drain, tuition tax credits do the same, but through the tax code."

Even privatization supporters note the inherent link between vouchers and tuition tax credits. As Andy LeFevre, head of the education task force of the ultraconservative American Legislative Exchange Council puts it, with tuition tax credits "the end goal is the same as the voucher; it's just a different way to come about it."

While the major supporters of tuition tax credits have historically been the Catholic Church and other religious institutions, the rhetoric has shifted in recent years to tax credits as a vehicle of "choice" and "marketplacebased competition." In this reincarnation, tax credits are promoted as education reform. And, taking a page from the voucher movement, supporters have found it's easier to pass tuition tax schemes if they are clothed in the mantle of helping poor kids.


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