OurFuture.org: Republican Tax Plan Opens Back Door to School Vouchers
Secretary of Education Betsy DeVos insists her lifelong support for school vouchers and other forms of school privatization will not lead the Trump administration to “mandate” these “school choice” policies. Nonetheless, her Republican friends in Congress have just put new provisions into their tax plan that will have essentially the same impact as a federally-supported school voucher program and will redirect millions of dollars from public treasuries to private and religious schools.
Republicans and DeVos know that school vouchers are generally unpopular with voters and have been voted down at the ballot box every time they’ve been attempted through referendum. Betsy DeVos and her husband blew millions in funding an attempt to pass a school vouchers measure in their home state of Michigan, only to see it go down to defeat.
Nevertheless, Congress, with DeVos’ blessing, is ramping up federal support for vouchers, with the only difference being, whereas vouchers distribute public education funds directly to parents to pay for private schools, these new schemes bring K-12 school vouchers in through the back door by using the tax code.
What Congress Did
One voucher-like scheme Republicans added to the tax code allows parents who have tax-free 529 college savings accounts to use that money – up to $10,000 a year per child – to pay for private K-12 school expenses, including tuition at religious schools.
This gives wealthy families – many who can already afford private school tuition – an option to have tax-free distributions to pay for K-12 expenses every year too.
Further, in the 33 states with tax deductions and credits to incentivize 529 savings, the extension lets private school families avoid state taxes too.
Kathryn Flynn at Forbes explains how this would work in a high-tax state like New York where up to $10,000 in 529 contributions is deductible from taxable income. “By depositing $10,000 to pay for a year of private school,” she writes, “a family with an annual income of $200,000 would see an upfront state tax savings of $665, which can be reinvested in the plan to grow tax-free.”
So while wealthy parents get a double dipping effect on their tax savings from this 529 extension, the rest of us bear the full tax burden of funding public schools for the vast majority of children. And more funds that could have gone to paying for public schools get redirected to private schools instead – just like with vouchers.
Profiting From ‘Donations’
Another voucher-like provision Republicans put into the tax code will not have as much immediate impact as the 529 extension but may have much more negative and wide-reaching effects long-term.
As an analysis by the Institute on Taxation and Economic Policy explains, a loophole added to the tax bill in conference “reward[s] some of the nation’s wealthiest individuals with a strategy for padding their own bank accounts by ‘donating’ to support private K-12 schools.”
The loophole takes advantage of education tax-credit programs set up in many states. Education tax credit programs use a third party – often called a “scholarship granting organization” (SGO) – that is set up as a nonprofit by the state or by financial groups connected to the private school industry. Tax credits are issued by the state to private individuals, businesses, or corporations that make donations to the SGO. The money from the SGO is distributed to selected parents to use for private school tuition.
In eighteen states, education tax-credits programs return 50 percent or more, in tax savings, of what the donor gave. In eight of those states, the tax credits return 100 percent of the amount donated. High-income taxpayers taking advantages of these tax-credit programs can also take a federal charitable tax deduction on top of that. So depending on their tax situations, wealthy people can actually make a profit off their “donations” to private schools.
What Republicans did in their tax plan incentivizes more wealthy people to take advantage of this scheme. By capping state and local tax deductions to $10,000, the new tax legislation dramatically increases the attractiveness of giving to education tax-credit programs.
“The profits that could be generated by ‘donating’ would grow in most states,” ITEP finds, as well as the number of wealthy taxpayers eligible to take advantage of the tax advantages.
According to ITEP’s analysis, wealthy folks in at least ten states – Alabama, Arizona, Georgia, Kansas, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina, and Virginia – will find it more lucrative to invest in education tax-credit programs than to donate to other charities.
Examples ITEP cites include high-income earners in Arizona, Georgia, Montana, and South Carolina being able to collect yearly profits as high as 37 percent of the amount donated, meaning donating $1 million to an education tax-credit programs would yield $1.37 million in tax savings.
And in the meantime, money that could have gone to paying taxes for public education gets redirected to private schools – just like vouchers.
Spreading Bad Education
It bears mentioning that these backdoor methods for funding school vouchers through the federal tax code not only rob public education of much needed funds; they also lead to generally bad education results
School vouchers have a generally lousy track record in benefiting individual students and creating systemic improvement.
Recent studies conducted in Indiana, Louisiana, Ohio, and Washington D.C. found students who use voucher programs are more apt to exhibit declines in academic achievement. Other studies in Indiana and Louisiana found the initial dips in achievement were temporary and students tended to catch up to their public-school peers.
But other studies of long-standing voucher programs have foundthey also pose serious risks to public education systems, including increased school segregation, additional administrative costs, more reliance on inexperienced teachers, and greater likelihood students who are the most costly and difficult to educate will be turned away or pushed out by private schools that are not obligated to serve all students.
No Good Argument
There’s simply no good argument for throwing new money and program administration at something like schools vouchers that have little to no prospects of producing widespread higher achievement but considerable risks of introducing negative results.
What’s also alarming is that vouchers and voucher-like schemes are eroding the nation’s historical separation between church and state and providing public funding of religious education that indoctrinates students in ideological, ahistorical, and nonfactual curriculum under-written by religiously fundamentalist institutions.
A Recent analysis by HuffPo education reporters found that 75 percent of voucher schools across the country that get taxpayer funds are religious schools, and 33 percent of the non-Catholic Christian schools use textbooks that teach, among other bizarre notions, that Satan created psychology, Manifest Destiny was about “spreading the gospel,” and slavery was “black immigration.”
It also bears mentioning that diverting funds from public schools to private institutions harms our children’s education when schools are forced to respond to the lost money by cutting staff and programs.
Shoe, Meet Other Foot
To be fair, in the past Democrats have taken back doors to push unpopular education policies as well.
Recall the fury Republicans expressed at the Obama administration’s efforts to encourage states to adopt Common Core Standards and other policy imperatives in order to receive federal grant money from Race to the Top and other education programs.
Complaints that the Obama administration was “overstepping” its authority and “dictating” education policies were countered by Education Secretary Arne Duncan insisting he hadn’t mandated anything at all and that states had adopted the new measures voluntarily.
Democrats in Congress knew that was not really the case but largely remained silent.
Now that Republicans are the ones leading the bait-and-switch game, however, there’s an added irony to the debate when the supposed upholders of “states’ rights” are the ones pushing federal incentives.
Betsy DeVos’ current response to this situation is to put on her “radar screen” even more efforts to push school vouchers into federal statutes. We should take her at her word.
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