Responding to my explanation yesterday that non-refundable education tax credits are not public money (as she had wrongly claimed), the Ed Sector’s Sara Mead seeks refuge, perhaps unintentionally, in equivocation. She links to an old Cato op-ed in which the ethanol blending tax credit is referred to as a subsidy. Perhaps Mead is unaware of this, but the 51 cent per gallon ethanol blending credit is refundable — it can result in government money going to ethanol blenders, not simply in the reduction of the taxes they owe.
Refundable tax credits — or at least the portion of them that involves a disbursement from government coffers — are subsidies. They are public money. I have never suggested otherwise. And this fact is entirely irrelevant to a discussion of non-refundable credits.
Mead also seeks to defend her earlier misstatement of fact by arguing that the earlier statement doesn’t actually matter. What really matters, she now says, is that non-refundable credits are, for all non-legal purposes, equivalent to government funding. She is just as mistaken for believing this as she was for believing they were government money in the first place.
The most obvious material distinction is one to which I drew attention in my previous blog post today. Under a scholarship donation tax credit, it is far easier for taxpayers to avoid being compelled to fund instruction that violates their convictions. Not only is making a donation under a tax credit program optional, but in the case where a taxpayer does decide to make a donation, the taxpayer chooses the scholarship granting organization that will receive the money. Because many different SGOs arise under well designed scholarship tax credit programs, it is easy for both low income families AND taxpayers to associate with ones that comport with their own values. This element of taxpayer/donor choice does not exist under either voucher or government monopoly school programs.
Non-refundable scholarship donation tax credit programs do not eliminate compulsion entirely — anyone who chooses not to participate is still taxed to pay for the status quo monopoly system — but it dramatically reduces the likelihood that anyone will be forced to pay for schooling he or she finds morally objectionable.
There are other substantive differences between education tax credit programs and vouchers/government monopolies. I describe them at length here.
One final note: Mead ends by wondering why Cato education policy scholars have a habit of commenting on her blog posts. The reason is prosaic: her misstatements give us a “news peg” on which to hang an empirically supported exposition of the issue in question. It is a very efficient and productive way for us to do our jobs, which is to inform the public about superior policy alternatives to the educational status quo.
So while Mead seems to think that her posts are not related to her work, they are an excellent help to us in doing ours.