Policy Forum

Arizona’s Scholarship Tax Credit: A New Direction for School Choice?

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Date and Time
September 17, 2001 4:30 - 6 PM EDT
Featuring Trent Franks, Former member of the Arizona House of Representatives and author of Arizona’s Scholarship Tax Credit legislation; Lisa Graham Keegan, Chief executive officer of the Education Leaders Council and former Arizona superintendent of public instruction; Carrie Lips, Author of “The Arizona Scholarship Tax Credit: Giving Parents Choices, Saving Taxpayers Money,” to be released on September 17 by the Cato Institute.

In 1997 Arizona pioneered a new approach to education: taxpayers receive a dollar‐​for‐​dollar tax credit for contributions to organizations that give students scholarships to attend private schools. Critics charged that the tax credit would drain the treasury; supporters believed taxpayers would save money as students use the scholarships to transfer from public to private schools. A new fiscal analysis of Arizona’s scholarship tax credit informs this debate. Data show that the tax credit has raised more than $32 million and funded almost 19,000 scholarships. The credit has been revenue neutral, but moderate assumptions about the growth of taxpayer participation suggest that the credit will ultimately save taxpayers millions of dollars. Could the scholarship credit mark the beginning of a new era for school choice?