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No. 605

December 5, 2007

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The Public Education Tax Credit

by Adam B. Schaeffer

Executive Summary

inherent to targeted programs. It also contends that

Public education is an end, not a means. For a

broad-based programs are superior to narrowly tar-

democratic nation to thrive, its schools must pre-

geted ones, even when the goal is specifically to serve

pare children not only for success in private life but

disadvantaged students. Targeted programs are fun-

for participation in public life. It must foster har-

damentally inferior--in both practical and strategic

monious social relations among the disparate

terms--to broad-based programs that include the

groups in our pluralistic society and ensure univer-

voting middle class. Finally, accountability in educa-

sal access to a quality education. Unfortunately, the

tion means accountability to parents and taxpayers.

American school system has long fallen short as a

Education tax credits afford this accountability

means of fulfilling these purposes.

without the need for intrusive government regula-

This paper offers a more effective way of deliv-

tions that create political and market liabilities for

ering on the promise of public education, by ensur-

school choice policies.

ing that all families have the means to choose their

To date, school choice policy has spread and

children's schools from a diverse market of educa-

grown only slowly, in part because of inadequate leg-

tion providers. All education providers--govern-

islation. Existing school choice laws fall short in

ment, religious, and secular--can contribute to

terms of both market principles and political con-

public education because all can serve the public by

siderations. Pursuing a policy that follows more

educating children.

closely what works economically and politically

Educational freedom can most effectively be real-

should increase the likelihood of long-term legisla-

ized through nonrefundable education tax credits--

tive success, program success, program survival, and

for both parents' education costs for their own chil-

program expansion.

dren and taxpayer donations to nonprofit scholar-

Model legislation derived from the policy and

ship funds. This paper argues that tax credits enjoy

political principles detailed below is presented in

practical, legal, and political advantages over school

Appendix B of this paper, and real-world examples

vouchers. These advantages are even more impor-

of how the legislation would work are given in

tant for choice programs that target low-income

Appendix A.

children, as tax credits mitigate some disadvantages

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Adam Schaeffer is a policy analyst with the Cato Institute's Center for Educational Freedom.