ERIC Number: ED453310
Record Type: Non-Journal
Publication Date: 2001-May-1
Reference Count: N/A
Fiscal Analysis of a $500 Federal Education Tax Credit To Help Millions, Save Billions. Policy Analysis No. 398.
Olsen, Darcy Ann; Lips, Carrie; Lips, Dan
This analysis discusses a proposed education tax credit that includes: a parental choice credit, where parents receive dollar-for-dollar reduction in income tax liability up to $500 per child for tuition costs, and a scholarship credit, which raises funds for low-income children by allowing dollar-for-dollar reduction in income taxes up to $500 for donations to a nonprofit scholarship. This analysis assumes that every dollar spent on the tax credit results in a revenue loss to the federal government totaling $9.2 billion. At the state level, the tax credit would create tremendous savings. By reducing private school costs, the credit would encourage parents to transfer their children into private schools, meaning that state governments would have fewer pupils to educate and could reduce expenditures. The parent choice component could help 330,000 new students attend private schools and make private schooling more affordable for millions of families already using private schools. The scholarship component could raise enough money to give 3 million students scholarships. If 2 million of those scholarships were used for moving into private schools, taxpayers would save $12 billion. The tax credit could enable 2.3 million new students to attend schools of their choice, saving $14 billion across the states. (SM)
Descriptors: Educational Finance, Elementary Secondary Education, Federal Government, Low Income Groups, Private Schools, Scholarships, School Choice, State Government, Tax Credits
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Publication Type: Numerical/Quantitative Data; Reports - Descriptive
Education Level: N/A
Authoring Institution: Cato Inst., Washington, DC.