We Can’t Vouch for Tuition Tax Credits

Jason Starr Nelson

During last year’s Kentucky General Assembly, House Bill 205 sparked a good deal of controversy. This bill would give families a tax credit for private school tuition.

Proponents of this type of legislation will argue it provides more choice for families and allow lower-income children access to a private education. The idea of tax credits and vouchers, which are direct payments to private schools, are mostly championed by Republicans, but they have carried Democratic support in other states. Unfortunately, those touting tax credits and vouchers have either been conned or are blatantly lying to the public.

Vouchers are a near impossible sale in Kentucky thanks to our state Constitution, but tax credits are a real possibility. So, why not give lower-income families the chance to send their children to private schools by offering them a tax break? There are many states that can answer that question.

In other states, tax credits have funneled money to private schools through tax credits and deductions. Under tax credits, an income tax bill is directly reduced. So if you owe $4,000 in taxes and get a $500 tax credit, you pay only $3,500. Under a deduction, your taxable income is reduced.

Kentucky’s version of tax credits, HB 205, failed last session. It would have given Kentuckians and dollar-for-dollar tax break up to $1 million. Supporters like John “Bam” Carney, R-Campbellsville, and Gary, Houchens, a Western Kentucky University and a member of the Kentucky Board of Education, and also served on the board for EdChoice Kentucky, couldn’t understand the backlash the bill received.

What they couldn’t understand is why we would allow state leaders and special interest to pick our pockets. To begin, if the bill would have passed, it was estimated it would cost Kentucky roughly $50 million annually in revenue. Illinois implemented tax credits in 2000. It cost the state $65.9 million in revenue and legislators responded by cutting $64.5 from the public education budget.

In Illinois, 46 percent of tax credits went to hose making more than $80,000, and 20 percent went to those making $60,000 to $80,000. Only 3 percent of tax credits went to those living in poverty. Under Kentucky’s proposed law, tax breaks would go to those making donations to private schools, meaning low-income families who cannot make a donation would see zero benefit. Meanwhile, wealthier Kentuckians would see large tax breaks, less state revenue means cuts to the budget, and let’s face it, that means public education cuts, sending a negative ripple effect throughout the state.

In Indiana, their voucher system is said to benefit $35,000 students, who received $154 million in tax money in 2017. However, half of those children had never attended public schools.

Then there is the near unanimous research. According to researchers from the University of Virginia, among many others, low-income students don’t benefit from attending private schools. When the researchers controlled for household income of those students who had attended private school, there was no noticeable difference in performance from their public-school counterparts. The study also found this applied regardless of where the student lived – rural or urban areas.

Bottom line is, America has been conned, state-by-state, since the early 1990s, through charter-school initiatives, voucher programs, and tax credits. These programs are social-welfare for the wealthy, and the data overwhelmingly shows they harm lower-income children. Ironically, it also leaves the dwindling middle class with fewer options – an underfunded and not-so great public school or an expensive private school that breaks the bank.

During the 2020 legislative session, some version of a tax credit bill and a charter bill will come up and it’s vital the general public understand the dangers of this type of legislation. America has 30 years of evidence proving these programs are social-welfare for the wealthy and detrimental to the middle class and lower-income Americans. We can’t follow the same path of so many other states, who have started reversing these trends.

Kentucky is always last to the table, willing to accept scraps. However, this is one instance being last to the table should benefit us, because we’ve seen the poison eaten by other states. Don’t drink the Kool Aid.

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