Opponents of parental choice in education are claiming that tuition tax credits are a subsidy for private schools and are therefore bad public policy. In a closer examination of this claim Mike Jerman, Vice President of Utah Taxpayers Association reveals that this logic is faulty.
The current public education system is already a subsidy for most families.
Jerman demonstrates that most Utahns already receive a subsidized public education courtesy of businesses and high income households. Most households do not earn enough income in their lifetimes to pay enough taxes to educate their children in Utah’s public schools. In fact, since the value proposed tuition tax credits would be less than the current per pupil spending amount for public schools, a tuition tax credit would be a smaller subsidy than the current public education subsidy which is largely financed by higher income households and businesses.
Nearly all Utah income taxes are dedicated to public education spending plus more than half of property taxes. State income taxes for K-12 students per year provide nearly $3,400 per student while Utah property taxes per student amount to $1,748 per year.
A typical household would need to earn $80,000 per year to pay $3,400 in state income taxes, the amount required to cover the income taxes to educate just one student. Since children attend public schools for 12.5 years (Kindergarten counts as a half year), a family with three children in public schools would have to earn $80,000 each year for nearly forty years to pay enough state income taxes to match the income taxes spent on their children’s education.
A household living in a $200,000 house typically pays $825 each year in school district property taxes, including the statewide basic levy. However, Utah school districts spend $1,748 in property taxes per student per year. This $923 per student difference is subsidized by other taxpayers, including Utah businesses. Businesses do not receive a 45% property tax exemption like primary residences and pay 44% of all property taxes in Utah. About 55% of property taxes are used for public education.
The major premise behind taxpayer funding of public education is to require businesses and higher income wage earners to subsidize the education of the majority. If most households were perceived as being able to educate their children without subsidy, then government would not operate an educational system but would simply allow families to educate their own children at their own direct expense in the private sector.
Therefore, to argue that tuition tax credits should be rejected because they are a “subsidy to private schools” ignores the fact that public education by its nature is largely a subsidized endeavor.
The Spending Lobby correctly argues that businesses benefit from public education through an educated workforce and therefore ought to contribute to the costs of public education. However, businesses also benefit from private education without paying taxes for private schools.
The Spending Lobby’s “Subsidy” Argument Would Also Apply To Aid for College Students Attending Private Universities
Is the Spending Lobby prepared to argue that students at Notre Dame and BYU should be ineligible for Pell Grants and the GI Bill? If tuition tax credits are a subsidy to private schools, and therefore “bad” then Pell Grants for students attending private universities should be discontinued since these would have to be considered subsidies for the private universities.
The American university system is universally recognized as the world’s best, and a fundamental reason for the U.S. success in this area is a system of vigorous competition between public and private universities. Pell Grants and other forms of federal government aid to students is a component of the competitive environment.
School choice is being implemented in other states and is gaining momentum in Utah.
Mr. Jerman points out that policy makers and taxpayers are finally realizing that several decades of significant K-12 spending increases and class size reductions are not getting the job done. Due to Utah’s relatively high birth rate, Utah will probably never be able to reach the national per student spending average. Fortunately, policy makers are finally realizing that “spending our way out of the problem” won’t work and is not even an option.
Utahns are increasingly favoring school choice as a means to improve education performance through competition and parental choice without raising taxes. Charter schools are a form of parental choice. Charter school enrollment, after a slow start, is finally starting to grow. Charter schools enrolled 537 students in 2000 and are expected to enroll more than 6,000 students in the coming school year. Projections are very optimistic for future growth as waiting lists for new and existing charter schools continue to add new students.
Arguments against school choice continue to be refuted, such as the claim that charter schools and tuition tax credits “drain” funding from existing public schools due to fixed costs or “cream” the best students and leave the worst behind.
Most observers are acknowledging that tuition tax credits are just a matter of time for Utah. One of the obstacles to passage of tuition tax credits in Utah has been Governor Michael Leavitt and Governor Olene Walker. Gubernatorial candidate Scott Matheson, Jr. is opposed to tuition tax credits even though he has sent his own two children to private schools. On the other hand candidate Jon M. Huntsman, Jr. has indicated a willingness to support tuition tax credit legislation.
It’s not a matter of “if” but “when” Utah parents are given more choices in meeting their children’s education needs. It’s just a question of what the enacted legislation will look like