Friday, December 19, 2008
Educational Tax Credits Is Needed in 2009 by Akindele Akinyemi
It's time for the State Constitution to be amended to allow educational tax credits for low-wealth families. The reason? Michigan is in deep financial trouble, and government estimates keep get ting worse.
The economic slowdown is prompting many families who can no longer afford both taxes and private school tuition to move their children into public schools.
The accelerating closure of private schools in urban areas will only add to the pressure. Public schools will suddenly need to spend more -- even as tax revenues drop. With this kind of budget problem, lawmakers need to take a look at an important benefit of programs that make it easier for families to choose private schools: School choice means huge savings for state and local governments.
What is needed right now is a broad-based, moderate-size education tax credit that would help families stay in private schools and save their children from burdening taxpayers with the public schools' price tag. The credit would also help others make the switch to the private sector, easing the burden on taxpayers even more.
Education tax credits reduce the amount a taxpayer owes the government for each dollar he spends on his child's education or on scholarships for children who need them. That money comes straight off a person's tax liability, so it's a dollar-for-dollar benefit: You can send it to the government or use it on the kind of education you want to support. Tax credits for donations to scholarship organizations help support school choice for lower-income families, while personal-use credits help middle-class families send their children to good schools.
The Mackinac Center for Public Policy have a link here (http://www.mackinac.org/article.aspx?ID=3273) on tax credits.
In the next legislative session here in Michigan there should be a bi-partisan effort to push this through. Democratic and GOP leaders in both State House and Senate must follow New Jersey's lead and propose a donation tax credit plan for Michigan. Businesses would get tax credits for donations to scholarship organizations that provide school choice for lower-income families. New Jersey's economic study supporting the Urban Enterprise Zone Jobs Scholarship Act concludes that this tax credit for children in eight underperforming districts would save $72 million over the length of the five-year pilot. Also, a recent fiscal analysis of Cato's model tax credit legislation shows that New Jersey could save $5 billion to $10 billion over 10 years with that larger program based on the savings found for New York and Illinois.
Think about what this can do for residents and the economy here in Michigan.
Many Democratic lawmakers have embraced education tax credits across the nation as a way to offset the persistent educational disadvantage facing low-income children. Seven years ago in the State of Florida's donation tax credit program became law. Only one Democratic legislator voted for it. In 2008, a third of statehouse Democrats, half the black caucus and the entire Hispanic caucus voted to expand the program.
The momentum is still building. A government fully controlled by Democrats in Iowa -- governor and both legislative houses -- expanded the tax credit dollar cap by 50 percent in 2007. Just this year, Georgia passed a $50 million program with no family income cap on student eligibility.
As you can see educational choice is just not about charter schools. It's a choice to save children through other means such as tax credits. But we first must amend our State's constitution to make this a reality.