May 17, 2012 10:43AM # Huge Victory for Educational Freedom in NH By [Adam B. Schaeffer](https://www.cato.org/people/adam-b-schaeffer) --- SHARE The New Hampshire House and Senate approved a [a path-breaking education tax credit bill](http://www.gencourt.state.nh.us/legislation/amendments/2012-1832S.html) yesterday [with an overwhelming 70 percent support](http://www.boston.com/news/local/new_hampshire/articles/2012/05/16/nh_house_senate_pass_school_tax_credit_bills/) 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](http://jimforsythe.com/) [who](http://capwiz.com/nea/nh/webreturn/?url=http%3A%2F%2Fwww.gencourt.state.nh.us%2Fhouse%2Fmembers%2Fmember.aspx%3Fmember%3D376948) [pushed](http://en.wikipedia.org/wiki/D.J._Bettencourt) [this](http://www.billohm.com/) [education](http://www.pamtucker.org/) [tax](http://www.gencourt.state.nh.us/house/members/member.aspx?member=376087) [credit](http://www.gencourt.state.nh.us/house/members/member.aspx?member=372821) 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](https://www.cato.org/a-soft-surrender-to-low-expectations/) should take note of what can be accomplished when lawmakers take principles and policy seriously. Note: Follow these links for [model legislation](https://www.cato.org/pdfs/model-tax-credit-legislation-schaeffer-cato.pdf), tax credit [legislative guidelines](http://wac.0873.edgecastcdn.net/800873/blog/wp-content/uploads/Legislative-Guidelines-for-Education-Tax-Credits-2012-02-07.pdf), and an explanation of [why credit percentages are so important](http://wac.0873.edgecastcdn.net/800873/blog/wp-content/uploads/Education-Tax-Credit-Percentages-41.doc). 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. ##### Related Tags [Education](https://www.cato.org/education), [Center for Educational Freedom](https://www.cato.org/center-educational-freedom) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).