A poll released last week by the Illinois Policy Institute and
the Friedman Foundation revealed a surprising item on the Christmas wish
lists of Illinois parents: a new school for their kids. Four out of
five Illinoisans said they would opt out of traditional state
public schools if given the chance. And they would choose private
schools over public by a margin of two to one (39 percent to 19
percent).
Legislators can help grant that wish and save money at the same
time. How? By expanding the state’s education tax credit
program.
Education tax credits are a great way to use private funds to
improve education and expand school choice for all families while
saving taxpayers money. The credits reduce the amount a taxpayer
owes the government for each dollar he spends on education. If a
business donates $4,000 to a scholarship-granting organization, it
could deduct $4,000 from its tax liabilities. Similar benefits for
donations can be applied to individuals or to parents on education
expenses for their own children.
Education tax credits, in other words, come in two forms. The
first, tax credits for donations to scholarship organizations, can
help support school choice for lower-income families. And the
second, personal-use credits, can help middle-class families.
Tax credits save the states money because the amount spent on
each student on average is so much less. According to the National
Center for Education Statistics, public schooling costs around
$10,700 per child, while private-school tuition averages around
$7,300.
Education tax credits cover just what a family needs to send
their child to a better school and turn what’s pocket change to an
education bureaucrat into a lifeline for thousands of children.
Three states now have modest forms of personal-use tax credits.
Iowa allows 25 percent up to $1,000, and Minnesota allows 75
percent of non-tuition expenses up to a maximum credit of $1,000
per child.
Illinois allows families to claim credits worth 25 percent of
their educational expenses up to $2,500, which means a small $500
tax benefit. That’s far too little to save much money or expand
choice significantly. Lawmakers should build on current law by
allowing a 100 percent credit on education expenses up to half of
current per-pupil spending in the public schools for each
child.
But a personal-use tax credit won’t be enough for many
lower-income families without a large tax liability. That’s why
lawmakers also need to pass a donation tax credit program for
scholarships.
Five states — Arizona, Florida, Iowa, Pennsylvania, and Rhode
Island — have serious donation credits. Pennsylvania allows a 90
percent credit for donations to scholarship-granting organizations
and Florida allows a 100 percent credit, helping thousands of
children from lower-income families attend good, independent
schools.
Tax credits have already been expanded in a number of states,
with the support of people that you might not expect. Democratic
legislatures or governors helped to pass tax-credit programs in
Arizona, Rhode Island, and Iowa last year, and Pennsylvania
expanded its existing program.
This year a unified Democratic government in Iowa increased the
tax-credit dollar cap by 50 percent to $7.5 million from $5
million. Many prominent African-American Democrats — most notably,
Newark Mayor Cory Booker — support tax credits. Even New York’s
Democratic Governor Eliot Spitzer supports tax credits and proposed
an education-tax deduction in his first state budget.
So there should be plenty of bipartisan cover for Republicans
and Democrats in the Illinois legislature to come together and
promise taxpayers they’ll do right by their children this Christmas
— and make good on that pledge in the New Year.
