Tag: tax credits

Obama Tax Policies and Beyond

I was a panelist for a Tax Notes forum on April 3 regarding Obama’s tax policies. The other panelists were Len Burman of the Urban Institute and Gene Steuerle of the Peterson Foundation. It was an expert and ideologically diverse panel, but nobody was fond of Obama’s fiscal policy direction. (In the photo, that’s former CBO director Rudy Penner to my left. Photo credit to Derek Squires)

Tax Notes summarized the discussion: “A diverse panel of economists and tax specialists largely agreed … that President Obama’s tax and budget plans at best would fail to forestall long-term fiscal ruin and could even hasten its arrival.” One point of agreement was that the tax code is too complex and it doesn’t need the complicated new tax credits that Obama has proposed.

Where we differed was on the need for added federal revenue, and herein lies the big tax policy battle ahead. Len thought that some form of new value-added tax (VAT) was inevitable in order that the government could  raise more money. I am increasingly hearing that argument from top fiscal scholars, and I fear that the drumbeat for a VAT will get louder.

Dan Mitchell and I are dead-set against a VAT because it will be a tool to fund even larger government, as we discuss in Global Tax Revolution. But supporters of limited government need to start watching this issue and making preparations to ward off a Euro-style money machine.

Vouchers Defeated in AZ. Freedom Can Still Prevail

The Arizona Supreme Court has just struck down two voucher programs serving disabled and foster children. This is a terrible blow to the families involved, but there is a way to continue offering them educational freedom: incorporate them into the state’s popular education tax credit programs.

Arizona residents and businesses can already make donations to non-profit scholarship funds and receive a tax credit for their donations. If the caps on those credits are raised, it will be possible to generate enough funding to serve the students formerly participating in the voucher programs. It would even be possible to create non-profit scholarship funds that specifically focus on serving special needs students, which could help parents choose the schools best suited to their individual children’s needs, and allow donors to know that their funds would go toward that cause.

While the Court has said that vouchers are impermissible in Arizona, it has already upheld the state’s tax credits that accomplish the same ends entirely through voluntary action. It is a solution that should satisfy everyone.

Everyone, that is, who has the best interests of children in mind.

Stop Wasting $Billions; Expand School Choice

The Philadelphia school system will spend over $3 billion for the first time next year. That works out to $18,500 per student in a failing school system and most likely leaves out significant costs like teacher health and retirement funds. Maybe it has something to do with the 84 administrative departments burning through funds that should be used to educate children.

In 2007 I highlighted the growing spending insanity in Philadelphia schools and noted that tens millions of dollars could be saved every year through even a small school choice program.

Pennsylvania’s small, successful, and popular donation tax credits system for private scholarships is already saving money and children from failing schools.

In this economy, Pennsylvania can’t afford not to have more school choice.

Why Vouchers?

Yesterday a universal voucher bill heavily promoted by state Sen. Eric Johnson died in the Georgia legislature.

I can’t understand why anyone continues to push for a brand-new voucher program when they already have a universal education tax credit.

Tax credits are more popular and pose less of a threat to private schools and homeschoolers than vouchers, and Georgia already has a tax credit program. All they need to do is lift the cap on available tax credits, which is set at $50 million.

School choice programs actually save money — billions of dollars in fact — so there is no sense in capping the program, especially during an economic downturn.

And there is no sense in pushing for a new, inferior policy when you can focus your efforts on increasing funding for an existing law.