Labor Day is almost upon us. It traditionally marks the start of new school year, and this year it’s expected to mark the Congress and White House’s formal push to overhaul the nation’s antiquated tax code.
What does one have to do with the other? Tax reform could offer taxpayers the opportunity to have greater control of their child’s education and students nationwide could be afforded greater educational opportunity.
This means more families — many of whom are desperate to get their child out of an unsuitable public school — would have the freedom to choose the school that meets their child’s needs. It means higher high school graduation rates and college completion. And, ultimately, it means more labor force participation, greater earning potential for students and increased gross domestic product for America.
Seriously, who can really oppose these things?
Inserting a federal education tax credit into this year’s tax bill would be a tremendous benefit for America’s families and children who are desperately seeking more and better educational options. The tax credit would inspire charitable contributions from corporations and individuals to state non-profits that provide scholarships for eligible children to attend a private school. Donors would then receive a federal tax credit.
An education tax credit means greater educational opportunity for families and children across the country. States would opt-in to participate, meaning it’s entirely up to the states whether they want to take advantage of this opportunity. Since states would opt-in, states would also decide the rules for non-profit scholarship granting organizations and of course for private schools as they do now.
Many states already have different forms of educational choice. For these states, this is an opportunity to augment current scholarship amounts, which are often very small. For the states that lack educational choice, it’s a tremendous opportunity for families and children in those states to choose a school that best meets their needs so that they too can excel in school and beyond.
A federal education tax credit would also have a minimal federal footprint because it would not be a federal program. It is tax policy. Secretary of Education Betsy DeVos has been clear that the administration has no intention of imposing anything on states — a view shared by the majority in Congress.
A recent Gallup poll noted that 71 percent of respondents said that private schools provide an excellent education, compared to just 44 percent who said the same for public schools. As two decades of research has shown, children participating in private school choice programs are graduating and going on to college at much higher rates than their peers at traditional public schools.
Some opponents are uneasy about a federal education tax credit and say the tax code is not a good vehicle for creating greater educational opportunity for families and children. But, 17 states already do this, and more than 200,000 children are benefitting. We now have an opportunity to expand this benefit to students in all 50 states.
Federal tax benefits for charitable contributions are not new. They have been critically important to making progress on a host of issues, including: tax breaks for interest on municipal bonds that build bridges and schools; tax breaks on capital gains that drives investment; and, tax breaks on retirement and pension income that drives savings and investment.
A federal school choice tax credit would use similar tax incentives to increase access to quality educational options.
The long-term economic benefit of increasing scholarships for private schools is enormous. Let’s say it produces 1 million high school graduates, most of whom will go onto college. This means increased labor force participation, increased earnings for students, increased tax revenue and increased GDP. This is a winner for families and children, for American small businesses, for our economy.
There are children in every part of this country who want and deserve better educational options right now. Most education reformers believe in local control of K-12 education, and the greatest form of local control is giving families the freedom and power to choose the best learning environment for their children. A federal education tax credit would create opportunity and, at the same time, help to shake up shake up an antiquated K-12 system that leaves too many children unprepared for college or the workforce by infusing it with greater educational choice and competition.
