Gage Skidmore
Secretary of Education Betsy DeVos is a big fan of educational tax credits. In a speech at the American Federation of Children’s Policy Summit on May 22, she showcased Denisha Merriweather, who used a tax-credit scholarship to attend a church-affiliated private school in Florida. (The American Federation for Children, a group that pushes school privatization, is a group created by Betsy DeVos and her husband Dick.)
Merriweather is the same student President Trump introduced during his address to the Joint Session of Congress when he promoted “school choice” for students in public schools.
The DeVoses, through the American Federation for Children, also happen to be major contributors to the American Legislative Exchange Council, which drafts corporate-friendly model legislation for Republican state lawmakers. ALEC wrote model legislation titled The Great Schools Tax Credit Program Act.
Education tax credits are similar to school vouchers. A voucher is money paid by the state to cover private school tuition for a student. Voucher money comes straight out of public school funds.
Vouchers are unconstitutional in eighteen states and one of the reasons is that the money can go to a religious school, crossing the line between church and state.
School vouchers have also yielded poor results. Research shows that low-income voucher students take losses academically and most don’t recover over a two-year period.
In a “scholarship tax credit program,” the money bypasses the state and instead goes through a go-between, a “scholarship granting organization” to a private school to pay a student’s tuition in full or in part. Typically, these organizations keep 10 percent of the money as they pass through funds to private schools.
A scholarship granting organization distributes money to students, who are purportedly “low income”, to attend a private school the organization has selected to include in its portfolio. Granting organizations can select the schools they do business with, whether they are religious schools or schools that are unaccredited.
While these groups have set a standard for “low income” —a family of four with an income of $64,750 or less—family income is not a determining factor for many of the students who receive the scholarships.
Here are four things you need to know as Secretary of Education Betsy DeVos seeks to establish an education tax credit system for the entire nation:
#1 Education tax credit programs deplete state budgets
According to a report issued by the School Superintendents Association and the Institute on Taxation and Economic Policy titled Public Loss, Private Gain: How School Voucher Tax Shelters Undermine Public Education, “Seventeen states currently divert a total of over $1 billion per year toward private schools via tax credits.”
Those tax credits deplete states and the Federal government of tax revenue and fill the coffers of private enterprises including religious schools, corporations and wealthy individuals.
As an example, the school-voucher expansion in Arizona could cost the state $24 million a year or more and $140 million is now being diverted from the state treasury to pay private-school tuition for students of any income bracket through a tax credit program. Senate Majority Leader Steve Yarbrough from Arizona has pocketed quite a bit of cash with his Yarbrough's Arizona Christian School Tuition Organization which has profited to the tune of $116 million via individual tax-credit donations since 1998. Senator Yarborough pays himself, as executive director, $125,000 a year
Alabama set aside $40 million to absorb the loss from tax credits. Indiana’s Center for Tax and Budget Accountability did an Analysis of Indiana School Choice Scholarship Program and concluded that the voucher programs did not achieve its goal of a higher level of academic achievement and the state lost millions in tax revenues due to the state tax credit scholarship program.
According to the Network for Public Education, “Some private schools have received as much as $18,000 per scholarship. Parents can get multiple scholarships for a child from multiple tuition organizations – something the state doesn’t even bother to track”.
#2 Education tax credit programs benefit the wealthy
Usually, when an individual makes a donation to a non-profit, she takes a 30 to 40 percent tax write-off. The education tax credit provides 100 percent-plus in write-offs, making it more attractive to wealthy individuals and corporations.
The tax credit can be used as a dollar-per-dollar write off on Federal taxes and, in some states, it can be used as an additional write-off on state taxes. With a donation to a scholarship grant-making organization, a person, company or corporation can benefit financially, sometimes doubling the tax write-off. The states that allow this double-dipping are Alabama, Arizona, Georgia, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina and Virginia.
For the past three years, Senator Marco Rubio of Florida and Representative Todd Rokita of Indiana have introduced legislation that would create a federal tuition tax credit program called the Educational Opportunities Act (EOA). The two states they represent have tax credit programs that have been profitable to wealthy donors, scholarship grant-making organizations, and private schools.
The tax credit program has become so popular with the wealthy in those states that, according to the report Public Loss, Private Gain, “the entire allotment of available credits is often claimed just hours after state tax officials begin accepting applications. In Georgia, the state’s entire allotment of $58 million in tuition tax credits was claimed in a single day on January 3, 2017. A few months earlier, the same occurred within a matter of hours with regard to $67 million of credits in Arizona and $763,550 in credits in Rhode Island…a journalist in South Carolina estimated that one savvy, anonymous taxpayer was able to reap a profit of between $100,000 and $638,000 in 2014 by stacking state, and possibly federal, deductions on top of tuition tax credits.”
#3 Education tax credit programs pose significant risks to students
Federal civil rights laws do not pertain to private schools, therefore there is no protection students have from discrimination due to race, religion or sexual orientation. Private schools subsidized by the tuition tax credit can also expel students who are performing below grade level and deny acceptance to English Language Learners or students with disabilities. In Arizona, only 3 percent of special needs students have been granted tax credit scholarships.
There is also no common denominator in determining the overall level of competency in basic subjects from one school to the next.
In some states, there is no oversight of a student’s progress using a state or federal proficiency evaluation and there is rarely a demand for financial transparency by the states of the education tax credit system which can lead to fraud.
The financial support provided by these tax credits might not meet the full tuition fee and therefore many low-income students are not able to attend a private school because the family is not able to pay the difference in tuition.
So far, the courts have turned a blind eye to the system of tax credits even though the money is many times funneled into religious institutions which leads us to #4.
#4 Education tax credit programs divert public money to religious indoctrination
Betsy and Dick DeVos want to spread the word about their religion and have been doing so on a statewide basis.
As I wrote in an article titled Betsy DeVos Pushes Online Learning, the first Michigan charter schools were operated by the DeVoses’ close friend, JC Huigenza, with their support, and were essentially Christian schools, with mandatory prayer meetings. The schools were closed after threats of lawsuits by the ACLU.
The New Yorker covered this religious angle in a story on Betsy Devos, noting the church’s official statement on science: “Humanity is created in the image of God; all theorizing that minimizes this fact and all theories of evolution that deny the creative activity of God are rejected.”
Betsy DeVos attended Calvin College, which is owned and operated by the Christian Reformed Church.
Dick DeVos is a proponent of Intelligent Design, the belief that life is so complex that it must have been designed by an “intelligent being”, referring to a Christian god, and pushed to get the religious idea introduced into science classes in Michigan
Betsy DeVos wants to share her religion and beliefs with all children in this country and what better way to do it than as the Secretary of Education establishing a national tax credit system.
Recommended reading:
New Yorker: Donald Trump’s War on Science
New Yorker: Betsy DeVos, Trump’s Big-Donor Education Secretary
The Nation: ALEC Exposed: Starving Public Schools
Source Watch: The American Federation for Children
American Legislative Exchange Council (ALEC): Model tax credit bill