Do Tax Credits Have Credibility?

Tax credits/vouchers offering public money for attending private schools have been introduced in numerous legislatures and enacted in eight states as of May 2011.  Possibly the oldest is in Arizona, enacted in 1997. (1) Most of them have the same structure as S.C. H.4894 with tax credits given to parents who sent their child to private/religious school.  Frequently added are tax write-offs up to (in some states) 100% of that owed for businesses/corporations who donate to scholarships for children from poverty backgrounds.  (Remember ALEC and the look-alike bills?)

One consistent result in various states trying tax credits/vouchers has been that the plan subsidizes middle-and upper-income families rather than poorer families as its supporters claimed it would.  In Arizona, in 1999, more than 90% of the scholarship fund money went to students already enrolled in private schools.(2)  In Iowa, Pennsylvania, and Rhode Island students already enrolled in private schools are eligible for scholarships.  Illinois taxpayers earning $80,000 or higher were nearly 16 times more likely to claim a tuition tax credit as were low-income taxpayers earning less than $20,000. (3) In Arizona students in the poorest areas received the least tax credit donations while the wealthiest areas received four times as much. Such results thereby exacerbate existing gaps in the quality of schools.  Board member Walter Brown did some figuring with H. 4894 and found that only families with incomes above $60,000 would receive benefits in South Carolina.  Many families qualifying for meal subsidies make too little to pay any taxes and, therefore, cannot claim credits.

Some states have set caps on yearly total funds to be paid out in scholarships but tax credits are costly.  Florida awarded $140 million in 2011; Arizona offered $17 million with a 20% increase each year.  Iowa has a tax credit cap of $7.5 million; Oklahoma’s cap is $1.7 million each for individuals and for businesses. In Pennsylvania businesses contributing scholarships can receive a credit of up to $300,000 per year while credits awarded cannot exceed $44.7 million. (4) In South Carolina H. 4894 is estimated to cost $37 million in the first year if passed.  This in a state with infrastructure needs, social services, and public and higher education all underfunded.

A third concern expressed about tax credits is the lack of accountability for outcomes.  In the South Carolina House’s protracted debate on H. 4894 much time centered on an amendment requiring private schools to share the same accountability tests as public schools.  It lost.  South Carolina’s proposed legislation does require that some standardized test be given to recipients along with the states of Arizona, Florida, Indiana, and Iowa.   However, Georgia, Pennsylvania, and Rhode Island have no requirement for participating private schools to administer standardized tests.  (3)

The problem with such poor accountability is, of course, that without comparison there is no way to determine whether these tax credit schemes are working or not.  Proponents of tax credits/vouchers talk about students “trapped in failing public schools” who will be “saved” by being sent to private schools.  By not requiring the same evaluation tool of both public schools and private schools accepting public school children with tax credits proponents ensure no way for their claims to be refuted or affirmed.   Perhaps that is their reasoning.

However, there are a few studies comparing these two groups.  Evaluation of Florida’s Corporate Tax Credit Scholarship Program in 2008-2009 concluded that test score gains for students in the Scholarship Program were comparable though smaller than the gains made by those in the matched public school comparison group.  (5)

Several studies have examined results in the Milwaukee tax credit program.  Although the initial data indicated a jump in the test scores of students who participated in voucher programs, later studies (6) (7) found that, in the same two districts, choice students performed no better on tests than nonchoice students

A later study of the Milwaukee program (8) showed that in the 2006-07 school year students’ state test scores were about the same on average in Milwaukee regardless of whether they used vouchers or attended public schools.

Finally, one interesting study has compared the performance of public school and private school students on the National Assessment of Educational Progress (NAEP).  While this study did not consider the use of tax credits/vouchers NAEP is the group which compares student performance around the world.  This particular study gives information on the relative effectiveness of public versus private schools in a matched comparison.  In 2003 U.S. students in selected private schools and public schools were compared in math and reading in grades 4 and 8.

When matched for student characteristics fourth grade reading performance showed no difference between public and private schools.  In fourth grade math public schools outscored private schools.  For grade eight reading private school students performed better than public school students.  In eighth grade math there were no differences between public and private. (9)

What this means to me is that public schools are effectively teaching the whole range of boys and girls coming to us from the broad array of backgrounds, ethnicities, and state of preparedness.  Students attending private schools typically would be from more narrow social and economic strata but can certainly receive an adequate education there if their parents choose to pay for them to attend such schools.  There is no justifiable reason to take public tax money to pay for private education.  Our job in public schools is to educate the broad and varied range of children in our polyglot society and the evidence is that we are doing a creditable job.  Tax credits and vouchers are not a creditable solution.

Sites read in preparation for this blog are listed below.

(1) Education Policy Center (2011) Vouchers and Tax Credits by State.

A Report by the People of the  American Way Foundation (2001) A Model to Avoid: Arizona’s Tuition Tax Credit Law.

A Report by the People of the American Way (March, 2003) Illinois Tuition Tax Credit:  Who Gets the Credit.  Who Pays the Consequences.

National Conference of State Legislators (2012). Tuition Tax Credits.

Figlio, David N. Evaluation of Florida’s Corporate Tax Credit Scholarship Program:  First Follow-Up Report – Participation, Compliance and Test Scores. National Bureau of Economic Research, June 16, 2009.

Metcalf, K. et al., “Evaluation of the Cleveland Scholarship Program,” The Indiana Center      for Evaluation, 1998.

Witte, J. F., “Who Benefits from the Milwaukee Choice Program?” In Bruce Fuller and Richard F. Elmore (Eds.), (1996)  Who Chooses? Who Loses? Culture, Institutions, and the Unequal Effects of School Choice, pp. 118-137, New York, NY, Teachers College Press.

Greene, J. P., Peterson, P. E., and Du, J., “The effectiveness of school choice in Milwaukee: a secondary analysis of data from the program’s evaluation,” Harvard University, Program on Education Policy and Governance, 1996.

Braun, Henry, Frank Jenkins, and Wendy Grigg. (2006). Comparing Private Schools and Public Schools Using Hierarchical Linear Modeling.  National Center for Educational Statistics.

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