What do you get when you marry taxpayer subsidies for private schools to taxpayer-funded corporate tax breaks?
A voucher in disguise called the “scholarship tax credit.”
“These proposals would divert corporate tax dollars owed to the state of Texas to subsidize vouchers for students to attend private schools, and would give these corporations a tax break in the process, with little or no accountability for what is taught, what is learned, or how taxpayer dollars are spent.”
There is a strange logic advanced by some at the Capitol that diverting tax dollars to private schools via a corporate tax credit somehow does not constitute a school voucher because it does not use “public money.” Because corporate tax dollars legally owed to the state are never paid to the Comptroller, somehow — “poof, presto change-o” — these proposals are no longer school vouchers.
Even an elementary school student can see through this shell game.
Here’s the reality. These proposals take corporate taxes legally due and owing to the State of Texas to provide vital services — including public education — and divert them to private entities that redistribute these tax dollars as payments for tuition at private schools. These private schools can receive the money simply by submitting paperwork saying they meet certain standards. There is no public reporting of results, no accountability for student performance, and no oversight of quality by the state.
In exchange, the corporations get a dollar-for-dollar tax credit for up to 50 percent of the corporation’s tax liability. The total amount of these tax credits is $100 million annually, or $200 million for each budget cycle, and the amount increases each year.
To understand the extent of the revenue lost, read the fiscal note prepared by the Legislative Budget Board on Senator Bettencourt’s SB 642: “In fiscal year 2017, the Comptroller anticipates $15 million in revenue loss due to tax credits in the General Revenue Fund, $5 million in revenue loss due to tax credits in the Foundation School Fund No. 193, and $80 million in revenue loss due to tax credits in the Property Tax Relief Fund. The Comptroller anticipates these amounts will increase by 5 percent each year.” (Now 10 percent a year in the committee substitute to SB 4 reported from the Senate Committee on Education).
This game of Three Card Monte is nothing new. These so-called “scholarship tax credits” are a well-worn ruse by voucher proponents to evade responsibility for supporting school vouchers that direct public dollars to private schools.
Law professor James G. Dwyer explains the flawed logic behind these schemes as follows:
Scholarship-fund tax credits or deductions create the appearance of further distancing the state from the private schools in which parents enroll children, but that is illusory. The scholarships consist at least partly of state money; the scheme essentially allows taxpayers to designate the use of some of the taxes they owe for payment of tuition at private schools the state has selected rather than for some other government program (footnote omitted). If taxpayers are reimbursed, through a tax credit, for every dollar they contribute to a private school scholarship fund, then the full amount of the scholarship value is really state money.
Dwyer uses an example involving his teenage daughters to further illustrate how fundamentally unsound the claim is that the state is not the source of the funds for these voucher programs.
“If they needed fifty dollars for a yearbook or sneakers and they owed me fifty dollars from some previous transaction, and I told them that instead of repaying the debt they should just pay for the yearbook or sneakers themselves and call it even, they would recognize that I had effectively paid for the yearbook or sneakers.” Dwyer wryly concludes, “Such understanding does not require great economic sophistication.”
So let’s be clear. Any legislation diverting taxpayer dollars, directly or indirectly, to private schools, is a school voucher. These so-called “tax credit scholarships” are vouchers funded with the tax dollars of Texans. To assert otherwise is to mislead taxpayers, or at least to deliberately allow oneself to be misled.
Anthony is CEO of Raise Your Hand Texas, an education advocacy group