Education Tax Credits: An Idea Whose Time has Come

Conservative lawmakers will likely put forth a raft of proposals to help address the needs of kindergarten through 12th grade public education in North Carolina. One idea the new leadership should give serious consideration is some version of tax credits to parents who send their children to private schools.

Tax credits are an effective way of expanding educational opportunities for middle and low income students. In addition, tax credits can help to reduce overcrowding in public schools and reduce the student/teacher ratio.

I know many of my friends who support and work in the public schools oppose tax credits, but hear me out. Tax credits have a strong upside. Furthermore, the case against them is built on half-truths and misperceptions.

Most of the major objections to tax credits center around constitutional questions or the expected loss of funding to the public schools.

Opponents of educational tax credits throw up a flurry of constitutional questions. However, they conveniently ignore that the Supreme Court has upheld the legality of similar programs. In 1983, the US Supreme Court (Mueller v. Allen), upheld a Minnesota program that provides educational tax deductions to parents, even though private and religious schools received the most benefit. According to the Court, the program did not violate the Establishment Clause.

More recently in 2002 the Supreme Court (Zelman vs. Simmons-Harris) upheld an Ohio program that provided vouchers for poor children to attend private schools, including religiously-affiliated schools.

There is also fear among many supporters of public education that tax credits would drain the public schools of much needed funding and undermine public education. Really?

Today North Carolina spends over $8 billion on K-12 public education yet, only 70 percent of students graduate four years after entering high school, student achievement scores have stagnated and a massive achievement gap persists among the races.

While there are many fine public schools, there are many that are struggling.. If a student chooses to enroll in another school it is because he or she have reasons to do so and better educational opportunities are available. Let’s remember these conditions and factors existed prior to tax credits. It wasn’t tax credits that caused individuals to leave.

Tax credits aren’t intended to punish the public schools – especially troubled schools. However they can provide public schools a powerful incentive for redressing concerns: competition.

Recently, two Northwestern University researchers (Hart & Figlio) analyzed data from the Florida Tax Credit Scholarship and found the increased competitive pressure public schools faced following the introduction of Florida Tax Credit Scholarship led to general improvements in the performance of the public schools. The gains appeared immediately and were most pronounced in schools most likely to lose students to private schools.

There are however, other reasons to support tax credits. Because the costs of educating a child in many private schools is actually less than the average cost of education in traditional public schools, tax credits can actually provide taxpayers with millions in savings.

The Fiscal Research Office of the North Carolina General Assembly estimates that a tax credit proposal introduced last year by House Majority Leader Skip Stam (R-Apex) to provide 11,500 parents with tax credits of up to $1,250 per semester would save the state about $29 million in the first year of the program. That’s enough savings to hire 527 teachers at $55,000 per year.

Tax credits are powerful tools for providing parents true choice in education. Tax credits targeted on low income students, such as Florida Tax Credit Scholarship are proven ways to improve educational opportunities for at-risk students and provide real help to struggling families.

Tax credits benefit students, parents and schools in a variety of ways. They expand economic freedom for parents and provide students greater access to quality educational opportunities. And – in the end – isn’t that what every parent hopes to provide for their children?

Bob Luebke is Senior Policy Analyst at the Civitas Institute in Raleigh