Tax credits vs. vouchers

Tax credits for private school scholarships may be a more viable way than vouchers to give alternatives to low-income students, writes Brian Anderson in City Journal. In three states, taxpayers can get a credit for donating scholarships to needy students.

In Arizona, since 1998, individual taxpayers have been able to get a dollar-for-dollar refund of up to $500 ($625 for married joint filers) for contributions to state-approved charitable organizations, which bundle the money together to provide scholarships worth up to 80 percent of private school tuition to needy kids. These organizations handed out nearly 20,000 scholarships last year. By 2015, the tax credits will generate more than $58 million per year, funding up to 61,000 scholarships, a Cato Institute report projects.

In Florida and Pennsylvania, businesses can get a tax credit for funding scholarship-granting groups.

Unlike vouchers, these scholarships can be used at religious schools without jumping through legal hoops. However, it’s harder for poor parents to find out about the availability of privately funded scholarships, and there’s no guarantee the money will be there every year.

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  1. Funding differences between public and private schools

    Public schools receive 84% more funding from the government than private schools do.