The Pennsylvania House recently passed a significant expansion of the state’s education tax credit program, which opens access to good private schools by allowing businesses to claim a tax credit for donations to scholarship funds for low‐income children. It already supports choice for more children than any other program in the country, and this legislation would double the available funds. The program is so popular and successful that only 4 percent of legislators voted against expanding it.
While education tax credits command nearly unanimous support, the Senate’s voucher bill is proving divisive for both lawmakers and voters. Senate Bill 1 expands the credit program but also creates a large, new voucher program.
Vouchers and tax credits differ from one another in important ways, and Pennsylvanians deserve to have their representatives consider them one at a time. Education tax credits should not be held hostage by the voucher controversy.
The recent U.S. Supreme Court ruling in Arizona Christian School Tuition Organization v. Winn highlights crucial differences between vouchers and tax credits. Vouchers are grants of government funds, while tax credits are private funds. And only an expanded education tax credit program would respect the values and preferences of taxpayers by giving them control over how their education dollars are spent.
In upholding an education tax credit program in Arizona, the court held that money spent and claimed as a credit against one’s taxes is private money, not government spending like education vouchers. Other taxpayers aren’t harmed by the choice of those claiming credits because the government isn’t spending collective tax revenue.
As Justice Kennedy explained, “a dissenter whose tax dollars are ‘extracted and spent’ knows that he has in some small measure been made to contribute to an establishment in violation of conscience. … [By contrast,] awarding some citizens a tax credit allows other citizens to retain control over their own funds in accordance with their own consciences.”
The challenge to this education tax credit program failed because only private funds are involved. A taxpayer challenging a voucher program would have standing under this decision. The court would be forced to recognize, in the words of the majority, that the plaintiff “has in some small measure been made to contribute to an establishment in violation of conscience” and therefore had standing in court to proceed with the litigation.
The composition of the U.S. Supreme Court and its precedent on school choice make it unlikely that a voucher program would be overturned in any case. At the state level, however, there are many constitutional threats to voucher programs.
The most recent and bracing example comes, again, from Arizona. In 2009, the Arizona Supreme Court ruled in Caine v. Horne that voucher programs for disabled and foster children violated a state constitutional ban on aid to private schools because it was an expenditure of government funds. That same court previously upheld a state tax credit program on the grounds that the credits did not constitute an expenditure of government funds. The status of vouchers as government funds was key to the decisions overturning Colorado’s voucher program in 2004 and Florida’s in 2006.
Many other states have constitutional language and legal precedents that are likely to render voucher, but not tax credit, programs unconstitutional. More than 30 states, at least, look hostile or uncertain on these grounds, including Pennsylvania.
And where voucher programs have been passed and still survive, they are more highly regulated because they use government, rather than private funds. Taxpayers, after all, are compelled to finance in some small part all choices made under the program. The desire to control and constrict those choices is therefore stronger and the rationale more persuasive to legislators and citizens. Regulations are the always imperfect and often counterproductive means demanded by interest groups and citizens attempting to ensure that their tax dollars are spent in ways they approve.
Only education reform through tax credits can expand freedom for everyone: children, parents and even the too‐often overlooked taxpayers who foot the bill.