Scholarship tax credits: Fact vs. fiction

Opponents of school choice often resort to misleading statements, misrepresentations and complete dishonesty to argue against giving low-and-middle-income students the chance to attend the same private schools the wealthy enjoy.  Here are the top scholarship tax credit myths debunked:

1. Scholarship tax credits will destroy the public school system

Scholarship tax credits are not a new idea so there's no lack of data on the policy's effect on students and the public school system. Currently, 18 states have scholarship tax credit programs and not one has experienced anything close to a public school apocalypse.

In fact, scholarship tax credit policies improve the public school system because they increase the pressure to improve by creating greater competition.

Studies have shown that just the presence of competition improves public school students' test scores in the year a scholarship tax credit policy is announced – even before it's fully implemented.

2.Scholarship tax credits take money away from public schools

Again, we have the data from 18 states that show this is simply not true. In fact, scholarship tax credit policies save states money over time.

Because private education tends to cost less per pupil than what the public school systems spend, the "loss of revenue" from a scholarship tax credit policy is lower than the spending would otherwise be, resulting in savings.

3. Scholarship tax credit policies only benefit the wealthy

In Louisville, a nonprofit organization called School Choice Scholarships is in its 21st year of providing private-school tuition to help low-and-middle-income families. (You can currently donate to them but don't receive a tax credit.) Their data shows the amazing impact of school choice scholarships on students.

These are the results from only changing the child’s school – not changing the parents or providing a more stable home environment for the kids.

They show that giving poor – even dysfunctional – parents the power of choosing where their children attend school produces incredible results. 

4. Wealthy donors decide which schools receive the scholarship money

Students' families – not the donors – decide the best school for their children.

5. Scholarship tax credits have a loophole that allows the wealthy to make money

Opponents claim that donors can take a tax credit with the state and then take a federal tax deduction, potentially allowing them to owe less in taxes than the actual amount of their donation. The current proposal in Frankfort has a specific clause disallowing this to happen for donors in the commonwealth. The proposed bill as of the date of this blog post reads that a donor to a qualified scholarship-granting organization can only claim a deduction "that does not exceed an amount equal to the total contribution for the taxable year."

6. Scholarship tax credits are vouchers

Scholarship tax credits use private – not public – dollars to increase school choice. Unlike vouchers, the scholarship donations never pass through the hands of government.