The New Hampshire House and Senate approved a a path-breaking education tax credit bill yesterday with an overwhelming 70 percent support in each chamber. The Governor must now decide whether to sign up with reform on the right side of history or face a veto-override battle.

The program includes home school expenses and allows the program to grow 25 percent each year if donations equal 80 percent or more of the program cap. It is income-limited, but scholarship organizations can use 20 percent of their funds for children who would otherwise not qualify, giving flexibility instead of a hard cut-off. It allows up to 30 percent of students to be currently enrolled in private school. It imposes no new regulations on private education beyond basic reporting to the department of taxation.

I provided analysis and advice on education tax credit policy structure to individuals in New Hampshire over the past year, but a policy analyst can only explain why certain structures are better or worse for accomplishing particular goals.

The New Hampshire legislators who pushed this education tax credit perseverance, principle and thoughtfulness deserve the highest praise … it is not often that we are fortunate enough to see a critical mass of true leadership in politics.

Legislators in other states should take note of what can be accomplished when lawmakers take principles and policy seriously.

Note: Follow these links for model legislation,  tax credit legislative guidelines, and an explanation of why credit percentages are so important. Due to the peculiarities of New Hampshire tax law, which makes it difficult or impossible to back out deductions if a taxpayer claims a credit, the credit is set at 85 percent of the donation. But with New Hampshire’s flat 8.5 percent business tax, a donor’s tax liability is reduced by over 93 percent. Since New Hampshire has no standard individual income tax, next up should be property tax credits to ensure even greater participation in education. Other states without these restrictions should pass 100 percent credits for both businesses and individuals, and for both personal use and donations.