Yesterday, I contended that education tax credits substantially avoid the compulsion inherent in school voucher programs -- that vouchers compel all taxpayers to fund every kind of schooling (including ones they may strongly object to) whereas tax credits do not.
In his most recent response, NRO's Robert VerBruggen disagrees. He writes
I don’t see how [tax credits do] anything whatsoever to change this, at least mathematically speaking. Whenever someone earmarks their tax dollars for a certain purpose — in this case, by “donating” to a voucher program and being reimbursed with a tax credit — the government has to devote a higher share of everyone else’s tax dollars to the rest of the budget. Non-”donating” taxpayers, therefore, subsidize the voucher program to the exact same degree they would have if the government funded it directly.
Let's deal with the core of our disagreement by following the money. Under a voucher program, you pay your taxes as always, the money goes into a big government pot, and it pays for every type of schooling -- including some that may violate your convictions. About this sort of thing, I agree with Thomas Jefferson, who wrote in the The Virginia Statute for Religious Freedom that:
to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical
(Well, I agree with the tyrannical part, anyway).
Tax credit programs like Arizona's are different. From the start, taxpayers are given a choice. If they wish, they may donate to any of a wide range of k-12 scholarship organizations that subsidize private school tuition, and receive a dollar for dollar tax cut to offset the cost. That portion of their money -- and only that portion of their money -- is then used for scholarships for private schooling. So far, there is no conviction-violating compulsion.
Alternatively, taxpayers may choose not to donate to any scholarship organization, in which case they pay their taxes as always and the money goes into the state treasury. From there, the only k-12 educational uses to which it can be put are funding the secular public and public charter school systems. In this scenario, none of the taxpayer's money goes to fund religious instruction of any kind.
There is no intermixing of funds between these separate options. There are two different pots of money, and each individual taxpayer decides which pot will receive his money.
It is not true that "the government has to devote a higher share of everyone else’s tax dollars to the rest of the budget," because the government is no longer financially responsible for the education of children once they accept scholarships. To understand this, we again just have to follow the money.
For example, imagine that half of all taxpayers donate to the scholarship program, and half do not. Are the half that do not make donations "subsidiz[ing] the [scholarship students] to the exact same degree" as if it were a voucher? No. Under a voucher program, every taxpayer would be paying some portion of the cost of the program. With tax credits, the entire cost of the private school scholarships is being borne by those taxpayers who are making the donations. The taxes still being paid by non-donors do not go toward scholarships and they do not go up. On the contrary, if anything, the taxes paid by non-donors go down.
Educating students in private schools via scholarship programs costs less than placing them in government schools. The more students leave the government system for independent schools, the less it costs to operate the government schools. [And anyone out there who thinks that fixed costs are dominant in the public school sector should consult the relevant econometric literature. I and others have done marginal cost estimates of public schooling and found it to be in the 80 to 85 percent range -- so when a child leaves the public school system, the system saves almost the entire average per-pupil cost.] And as the cost of the public school system goes down, the amount of revenue that needs to be appropriated for it goes down as well. In most states, state level public school appropriations are tied to enrollment, so appropriations will fall as students leave the government system.
The only scenario in which non-donating taxpayers could be said to have an "increased" tax burden due to an an education tax credit program is one in which there was never a tax-funded government school system in the first place. Then, there would be no savings from moving children out of public schools. But even in that fictional scenario, no taxpayer would be forced to pay for devotional religious instruction. They would always have the choice of donating to secular scholarship organizations, if they so wished.
So credits don't suffer the same conviction-violating, conflict-generating, compulsion problem that afflicts vouchers.
I should add, of course, that public schools are much worse than vouchers in this regard. The conventional public school system not only forces all taxpayers to fund a single official government organ of education, sparking endless battles over what is taught, it puts huge financial pressure on all families to place their kids in that system, by virtue of its lavish funding monopoly. How a nation founded on liberty was ever lured into adopting such a compulsion-laden, Balkanizing system is a very interesting story of its own.