Chances are that Fenty will modestly improve a situation that would be difficult to make worse — just like the big‐stick mayors he’d like to emulate in Chicago, Boston, and New York. But while a dictator may make the trains run on time, only a free society can create an excellent and diverse school system. If Fenty and other mayors wish to make real progress, they should look to education tax credits that make schools accountable to parents.
Education tax credits are the one form of school choice that D.C. has not experimented with, and they are ironically the best fit for the city. With some of the highest income taxes in the country — a nine percent individual income tax and ten percent corporate income tax — the District is a natural place to try tax credits.
Washington is a fairly advanced city in terms of school choice — though that isn’t saying much. A significant number of charter schools serve over 17,000 children, and almost 2,000 children receive vouchers to attend a school of their choice. Both systems, however, are hobbled by counterproductive regulations and can hardly meet the demands of parents.
Education tax credits allow any taxpayer to take a dollar‐for‐dollar credit on donations to scholarship granting organizations that help lower‐income families pay for a school of their choice. So if a business owes the city $5,000 in taxes and donates $5,000 to a scholarship organization, the company pays nothing in taxes. Individual taxpayers get the same kind of credits for their donations, as well as education expenses such as tuition or textbooks for their own children. So if a mother owes $500 in taxes and spends more than $500 in tuition, she pays no taxes that year.
The primary benefit of education tax credits is that they make schools accountable to parents rather than to corrupt school boards or well‐meaning mayors. But the benefits of tax credits go far beyond student achievement, which, all controlled studies show, is improved by school choice programs.
Tax credits encourage the participation of local businesses, churches, and other non‐profits in educating the city’s children, fostering a sense of community and strengthening society. They encourage a sense of responsibility and agency in parents, who control their child’s education and can ensure they receive a good education.
Finally, a system of widespread school choice will prompt the development of new schools. And a city with a large variety of good, affordable schools will encourage high‐income families to stay in the city instead of moving to the suburbs, increasing revenue even as tax credits save the city on education spending.
Existing education tax credit programs already save their states substantial sums. Pennsylvania now provides tax credits to corporations for a total of up to $44 million in educational donations per year, up from $40 million in 2005. A $40 million ETC program is about half a percent of Pennsylvania education spending, but because the amount spent on each scholarship is so much less than the amount spent per pupil in the public system, these credits are estimated to save the state between $150 and $200 million annually. A bigger program, expanded to just around 5 percent of the education budget, could save Pennsylvania as much as $2 billion.
Since the District of Columbia spends over $15,000 per student in public school, compared to the national average private school tuition of around $4,000, tax credits would save the city tremendous sums now wasted, lost, or embezzled making their way through a broken system.
Mayor Fenty and his counterparts in other cities may have the best of intentions, but increasing centralized control will not transform schools. At most, studies of past mayoral takeovers provide hope that they can whip the system into something very bad instead of horrifying. Education tax credits, however, offer truly transformative possibilities. Mayors should use them to put power back in the hands of parents and communities.