Tax Credit Scholarships: “Neovoucher” Profiteering Disguised as Philanthropy | deutsch29

Tax Credit Scholarships: “Neovoucher” Profiteering Disguised as Philanthropy | deutsch29:

Tax Credit Scholarships: “Neovoucher” Profiteering Disguised as Philanthropy

In October 2016, Carl Davis of the Institute on Taxation and Economic Policy published a paper entitled, “State Tax Subsidies for K12 Private Education.” Below is Davis’ introduction:

One of the most important functions of government is to maintain a high-quality public education system. In many states, however, this objective is being undermined by tax credits and deductions that redirect public dollars for K-12 education toward private schools. Twenty states currently divert a total of over $1 billion per year toward private schools via special tax credits and deductions. These tax subsidies are essentially backdoor voucher programs, or “neovouchers,” as they use the tax code to provide what amount to private school vouchers even when traditional voucher programs are unpopular with the public or outright unconstitutional.

Because of the ways that state and federal tax law interact, the subsidies offered in ten of these states turn the concept of a charitable “donation” on its head by offering upper-income taxpayers a risk-free profit on contributions they make to fund private school scholarships. In these cases, even taxpayers who would not ordinarily be interested in contributing to private schools may find the incentive too strong to ignore.

Some states have seen an entire year’s allotment of tax credits claimed within days, or even hours, of being made available as wealthy taxpayers seek to capture their share of the profits associated with convoluted “neovoucher” systems.

In effect, states that have encountered political or constitutional obstacles to spending public dollars on private schools have instead set up a system that 

Tax Credit Scholarships: “Neovoucher” Profiteering Disguised as Philanthropy | deutsch29: