Common Sense Answers to Common Questions on Education Tax Credits

Education Tax Credits are an increasingly popular way parents can make the best choices for their child’s education. They are a dollar for dollar credit on an individual’s or corporation’s (partnership, LLC etc.) tax bill. Instead of a deduction which reduces the income on which tax is paid, a credit directly offsets the tax bill, literally putting money right back into the taxpayer’s pocket.

Several states have various forms (Arizona, Florida, Illinois, Iowa, Minnesota & Pennsylvania) for either personal or business taxes. Other states, such as New York, Maryland, New Hampshire, South Carolina & Utah will (or may) propose a tax credit this year. Tax credits are used to directly offset costs for (depending on the specific state) tuition expenses, tutoring, textbooks, computer hardware and educational software as well as special education expenses.

Are they constitutional?

Yes. Educational tax credits have been constitutional since 1983, when the US Supreme Court upheld Minnesota’s program. In 1999, the court let precedent stand on the matter, declining to review Arizona’s program, upheld as constitutional by that state’s highest court.

Has the Court ruled on any other similar issues regarding church state separation?

Yes. The Supreme Court ruled as far back as 1947 that government funds may be used to support non-sectarian and non-religious programming at religious schools. Textbooks, transportation, and school lunches as well as school nurses and special education therapists are all examples of secular purposes that government may fund, even in religious schools.

Is this different because government money is going to religious schools?

No. Zero government money goes to schools. Tax credits are NOT government funds.

They are personal funds of an individual parent (or business). Through personal choice, they pay for tutoring, books, educational software, summer school, SAT prep etc. They may also pay for a portion of private school tuition, but no government money is spent and no government action taken.

As Jews concerned with the world around us, shouldn’t we be helping public schools?

Yes. And tax credits do help public schools. Low to moderate income families can pay for tutoring, educational software, SAT prep courses etc. to make sure their children get ahead. Wealthy parents do this now; poorer parents sometimes hold off. Now they won’t have to.

Doesn’t this take money out of the public schools?

No. Not one dollar in public aid to public schools is diminished by these tax credits. In fact, more money goes towards education in general, just not through the bureaucratic hoops.

Why tax credits as the way to go?

Besides being constitutional, they are efficient. Rather than government bureaucracy, parents make the choice and directly spend the money. No forms to fill out, no weeks spent waiting for the check.

Who benefits from tax credits?

Everyone. On personal tax credits, parents have the power to choose what is best for their child and their child gets the best educational services available. On the business tax credit model, schools can tap into a whole new system of funding by partnering with local businesses.

Most of all, students benefit. If they need some extra help, or if they need some special education services, testing or therapy, they get it – right away. If they need a test prep course to get into a better college or some summer school to catch them up or get them ahead, they can get it.

Who supports tax credits?

In New York, a wide coalition includes the Catholic and Lutheran communities and the Sephardic and mainstream Orthodox communities. In states with tax credits (e.g. Arizona & Pennsylvania), Jewish Federations support them and serve as the conduit of funds raised.