New Report Concludes Private School Tax Credits Undermine Public Schools

| October 24, 2016

Children’s Action Alliance:

In its just-released report “State Tax Subsidies for Private K-12 Education,” the Institute on Taxation and Economic Policy (ITEP) shows that private school tax subsidies, including Arizona’s four tax credits for private school tuition scholarships, are undermining states’ ability to maintain a high-quality public education system.

After studying the 20 states that have some type of private education tax subsidy, ITEP has concluded that the subsidies lack budgetary oversight and divert revenue needed to support public schools. The report also details how upper-income taxpayers can use the subsidies to generate a profit by claiming a deduction on their federal income taxes even when their contributions were fully reimbursed by the state tax credit.

This short video describes why you should care about the damage done from private school tax credits.

In January, CAA identified four reforms that can reduce the damage from Arizona’s private school tax credits:

  • Cap the growth in “low Income” corporate tax credits so they can’t continue to grow by 20% each year
  • Focus all scholarships on students in low income families
  • Remove the ability for donors to recommend specific students for scholarships
  • Limit administrative expenses to 5%

Learn more about these and other issues by reading ITEP’s full report. 

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Category: Education, General

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