One More Reason to Hate Wall Street (And Charter Schools)
It is obvious how private charter schools can turn a profit by spending less on salaries, maintenance, supplies and services than they take in from local and state taxes and donations from wealthy philanthropists. What has been flying under the radar is what hedge fund managers, big banks and foundations hope to get out of their investments in charter schools. In a recent report on Democracy Now, Juan Gonzalez turned up an obscure tax credit that was passed by Congress at the end of the Clinton administration in 2000, called a New Markets tax credit. It provides an enormous federal tax credit to banks and equity funds that invest in community projects in underserved communities. The credit has been heavily used in recent years for charter schools.
Gonzalez says that when investors put up the money to build charter schools, they can double their money in seven years through this 39% tax credit. Because it is a tax credit on money that they’re lending, they also get to collect interest on the loans. So it is immensely profitable to