The Public Education Tax Credit

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Public education is an end, not a means. For ademocratic nation to thrive, its schools must preparechildren not only for success in private life butfor participation in public life. It must foster harmonioussocial relations among the disparategroups in our pluralistic society and ensure universalaccess to a quality education. Unfortunately, theAmerican school system has long fallen short as ameans of fulfilling these purposes.

This paper offers a more effective way of deliveringon the promise of public education, by ensuringthat all families have the means to choose theirchildren’s schools from a diverse market of educationproviders. All education providers — government,religious, and secular — can contribute topublic education because all can serve the public byeducating children.

Educational freedom can most effectively be realizedthrough nonrefundable education tax credits — for both parents’ education costs for their own childrenand taxpayer donations to nonprofit scholarshipfunds. This paper argues that tax credits enjoypractical, legal, and political advantages over schoolvouchers. These advantages are even more importantfor choice programs that target low‐​incomechildren, as tax credits mitigate some disadvantagesinherent to targeted programs. It also contends thatbroad‐​based programs are superior to narrowly targetedones, even when the goal is specifically to servedisadvantaged students. Targeted programs are fundamentallyinferior — in both practical and strategicterms — to broad‐​based programs that include thevoting middle class. Finally, accountability in educationmeans accountability to parents and taxpayers.Education tax credits afford this accountabilitywithout the need for intrusive government regulationsthat create political and market liabilities forschool choice policies.

To date, school choice policy has spread andgrown only slowly, in part because of inadequate legislation.Existing school choice laws fall short interms of both market principles and political considerations.Pursuing a policy that follows moreclosely what works economically and politicallyshould increase the likelihood of long‐​term legislativesuccess, program success, program survival, andprogram expansion.

Real‐​world examplesof how the legislation would work are given inAppendix A of this paper, and model legislation derived from the policy and political principles detailed below is presented in Appendix B.

Adam B. Schaeffer

Adam Schaeffer is a policy analyst with the Cato Institute’s Center for Educational Freedom.