Commentary

Move Over Fed: Leave Tuition Tax Credit Scholarship Options to the States

Lindsey Burke
By Lindsey Burke | February 24, 2017 | 9:44 AM EST

(Wikimedia Commons Photo)

Such tuition tax credit scholarship programs make sense at the state level, and have worked well and grown in popularity over the past decade. They are now in operation in some 17 states throughout the country. But the policy is and should remain at the state level, and the administration should pursue better options for advancing education choice through federal policy.

According to Politico, the administration’s proposal could mirror a bill introduced last Congress by Sen. Marco Rubio, R-Fla., and Rep. Todd Rokita, R-Ind., which would provide a credit toward federal tax obligations of up to $4,500 for individuals and up to $100,000 for corporations that make donations to nonprofit scholarship granting organizations. These organizations, in turn, would provide a scholarship to an eligible low-income child to attend a private school of choice.

A federal tuition tax credit scholarship program would create myriad problems. Fundamentally, education choice policy should represent a redirection of the financing of education based on sound principles.

Furthering federal entanglement in the funding of education through new federal programs would be unsound and would come at the expense of state, local, and parent decision-making.

At the same time, the federal tax code is not the appropriate lever for establishing a tuition tax credit scholarship program because, unlike at the state level, where states have a state constitutional mandate to provide each child with an education, the federal Constitution has no such provision.

A federal program opens the door to regulating private schools by prescribing the types of scholarship granting organizations donors can contribute to, and by regulating these organizations to ensure only schools deemed acceptable according to federal standards can participate.

As University of Arkansas professor Jay Greene has noted, Americans prize a federalist system—in which policies are set by states and localities—because each state can tailor policy to its needs and try different approaches, see what works, and then adjust accordingly. Enacting a national program excludes this sort of policy experimentation and innovation.

Moreover, a federal tuition tax credit scholarship program could homogenize state tuition tax credit scholarship programs, limiting their ability to be mission-specific, and reducing the diversity of options available to families.

Proponents of the federal program argue, in part, that by incentivizing states to establish scholarship granting organizations and participate in the federal program, a federal tuition tax credit scholarship could create choice options in states where union domination has thwarted school choice efforts in the past.

But to achieve this goal, such a proposal would have to include one of two equally problematic provisions: It would either have to require states to establish their own scholarship granting organizations to participate, or it would have to create a similar federal organization.

Federal inducements to create new state-level scholarship granting organizations will likely come with mandates that those organizations aren’t school- or sector-specific; that is, it could preclude donors from receiving a federal tax credit if they give to scholarship granting organizations that are mission-specific and work with schools of a specific education viewpoint or particular religious affiliation.

Establishing a federal scholarship granting organization is outside the scope of federal authority, and could put pressure on existing state organizations to conform to the federal model in order to participate.

President Donald Trump has rightly said he wants “every single disadvantaged child in America, no matter what their background or where they live, to have a choice about where they go to school.”

With conservative leadership at the helm in a record 68 percent of state legislatures, and with conservatives controlling both legislative chambers and the governorship in 24 states, there is an unprecedented opportunity to advance education choice.

States like Texas, Arkansas, New Hampshire, and Arizona, to name a few, are currently working to create universal education savings accounts (ESAs) for students, massively accelerating the school choice revolution.

Although primarily a state focus, there are steps that the administration can take, working in conjunction with Congress, to advance education choice from the federal perch. That includes reauthorization and expansion of the D.C. Opportunity Scholarship Program, which provides vouchers to children from low-income families living in the nation’s capital.

The administration can work to create more choices for military families, and it can create options for Native American children attending Bureau of Indian Education schools—identified as the worst performing schools in the country—by converting federal funding into education savings accounts.

These federal policy reforms would be a huge boon for education choice. Let’s let states and localities continue to take it from there.

Lindsey M. Burke researches and writes on federal and state education issues as the Will Skillman fellow in education policy at The Heritage Foundation.

Editor's Note: This piece was originally published by The Daily Signal.

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