The Educational Choice for Children Act would be a giveaway to rich people
There are better ways to support school choice
Yesterday I wrote about how Republicans might try to use the budget reconciliation process to create a federal school choice tax credit.
With might that look like? Lindsay Fryer, who worked for Republicans on both the House and Senate education committees, pointed to draft legislation called the Educational Choice for Children Act. That bill was introduced in the last Congress by Louisiana Senator Bill Cassidy. It didn’t advance, but it had 31 Republican co-sponsors, and Cassidy himself recently became the chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee.
What would it do? In short, the bill would give individuals and corporations tax credits if they donate to organizations that provide private school scholarships to elementary or secondary students in a household “with an income which is not greater than 300 percent of the area median gross income.”
Personally, I’m not a fan of these types of scholarship programs, for five main reasons.
One, why all the rigamarole to support private schools? It feels like a Rube Goldberg contraption in policy form. Donors get a tax credit… for donating to a scholarship organization… which has to find eligible students… and then pay their tuition costs. Why not just offer parents who send their children to private schools a refundable tax credit, rather than directing tax credits to the donors? That would at least be a simple and straightforward approach.
Two, the bill is structured in a way to offer tax credits to individual and corporate donors. But who would actually benefit from these savings? Mainly rich people and corporations.
Three, the bill (and most state tax credit programs like it) put a cap on how much it would cost. I guess that makes sense from a budgeting standpoint, but it means the credits are only awarded on a first-come, first-serve basis. Once again, that benefits the people (and corporate lawyers) who pay accountants and tax professionals to be first in line. That’s not exactly equitable or universal.
Four, there’s the income requirement for recipients. People who read the bill quickly might not have picked up on which students exactly would be eligible for the scholarships. To repeat the language from above, the bill says scholarships are limited to families “with an income which is not greater than 300 percent of the area median gross income.”
Did you catch that? It’s not 300 percent of the federal poverty level; it’s 300 percent of the “area median income” or AMI.
It makes sense to tie federal policy to area median income, since we live in a big country and prices for things like housing and schools are tied to local markets. But according to the Urban Institute, “low-income families are defined by law as those with incomes below 80 percent of AMI.” This bill goes well above and beyond “low-income.”
To put it in concrete terms, the AMI for the Washington-Arlington-Alexandria metro area was $152,000 in 2023. If this bill had been in effect at the time, the federal government would have subsidized private school tuition for D.C. families earning 3 times that amount ($456,000). I don’t think that’s a good use of federal resources.
Which brings me to my fifth and final concern: Because the bill’s authors want to limit how much they’re willing to spend on it, they set the maximum amount of credits at $10 billion per year. That’s… a lot of money! To put that figure in perspective, that’s almost half of what the federal government spends on its entire Title I program, and it’s 17 times what it invests in public school choice programs like magnet and charter schools.
The federal government could do a lot of good for a lot of poor and working class kids with $10 billion a year. Heck, there are some great public school choice programs out there, and I’m all for the feds supporting state and local governments that want to expand options like those. But federal tax credits are an inefficient, ineffective way to reach families who actually need the most help finding good schools.