NCPA - National Center for Policy Analysis

Would Tax Credits Be An Acceptable Substitute For School Vouchers?

January 15, 2001

Supporters of school vouchers fear their movement currently lacks sufficient political support to win approval in a sharply divided Congress.

Although 21 states are mulling vouchers, teachers' unions -- which are vehemently opposed to them -- are the strongest lobbyists of state legislatures in almost every state, political observers say. Only Florida, Ohio and Wisconsin use vouchers in limited forms -- with only 13,595 students in those states granted vouchers in the 2000-2001 academic year.

Moreover, voucher use in religious schools is being challenged in courts and has been declared unconstitutional in Ohio. The U.S. Supreme Court will likely hear an appeal this year.

So for the time being, voucher proponents are weighing the pros and cons of offering parents tax credits or deductions for sending their children to private schools. Four states already offer modest programs of this kind.

  • Minnesota offers a maximum $1,625 tax deduction per child in grades K-6 and $2,500 per child in grades 7-12 -- with families earning less than $37,500 getting a tax credit of up to $1,000 per child or $2,000 per family.
  • Iowa's education tax credit is only $250 per family.
  • Illinois' is 25 percent of spending on education, up to $500 per family.
  • Arizona grants a $500 tax credit for donations to groups that grant scholarships to children in private schools.

Tax credits so far have fared better in courts than vouchers. In striking down Cleveland's vouchers, the 6th Circuit Court noted that the Supreme Court upheld Minnesota's tax deduction in 1983.

Source: Benjamin Kepple, "Can Bush's Plan for School Vouchers Get Past Sharply Divided Congress?" Investor's Business Daily, January 15, 2001.


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