The Fiscal Impact of a Large‐​Scale Education Tax Credit Program

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In this paper we estimate the budgetary impactof the Cato Institute's Public Education TaxCredit model legislation on five states and present a generalized spreadsheet tool ("the FiscalImpact Calculator") that can estimate the program'seffect on any other state for which the necessaryinput data are supplied. It is estimated that,in its first 10 years of operation, savings from thePETC program would range from $1.1 billion forSouth Carolina to $15.9 billion for Texas. Illinois,Wisconsin, and New York are estimated to enjoy10-year savings within that range.

Public Education Tax Credits reduce the stateand local taxes owed by anyone who pays for the privateschooling of an eligible child. Parents can claimcredits for their own children's educational costs,and other taxpayers (including businesses) canclaim credits when they pay for the education ofsomeone else's child, either directly or by donatingto a nonprofit scholarship-granting organization.

Spreadsheet Calculator Tool for PA no. 618 (XLS, 249 KB)

Andrew J. Coulson

with a technical appendix by Anca M. Cotet

Andrew J. Coulson is the director of the Cato Insitute's Center for Educational Freedom. He is the author of Market Education: The Unknown History. Anca M. Cotet is an assistant professor of economics at Ball State University.