Matthew Ladner

Tuition tax credit saves at least twice what it costs state

Posted on November 23, 2009 | Author: Matthew Ladner
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Baylor University economist Dr. Charles North developed an estimate of the savings to state taxpayers due to the individual tax credit, and shared his findings with the Arizona Legislature last week. You can find Dr. North’s analysis here and view his testimony to the Ad Hoc Committee on Private School Tax Credit Review here.

Dr. North provides a conservative estimate that the credit saves taxpayers twice as much money as the credit costs the state treasury each year. The savings could be greater than that.

During the same hearing, committee chairman Rep. Rick Murphy revealed the result of his survey of Scholarship Tuition Organizations (STOs). The survey included responses from 51 of the 53 STOs that collectively represent 96 percent of the funds raised (the other two groups may be defunct).

Thirty-two STOs reported considering family tax returns in the awarding of scholarships. Only seven of the 50 groups reported considering donor recommendations in awarding scholarships. Dr. North pointed out in his report that some of those recommended donations aid low-income children.

The Goldwater Institute went on record supporting STO reform—including annual audits—back in 2003. Lawmakers need to create either a public or a private oversight structure to deter STO malfeasance. But, some of the criticisms have jumped the shark. For instance, the Attorney General’s Office threatening to sue STOs over tiny fund balances when school districts have carried fund balances in the hundreds of millions of dollars for years. Quelle horreur!

Let’s make the necessary reforms to the tax credit program and actually focus on the serious education problems facing the state and the vast majority of Arizona children attending public school.

Dr. Matthew Ladner is vice president for research at the Goldwater Institute.

Learn More:

Goldwater Institute: The Arizona Scholarship Tax Credit: Providing Choice for Arizona Taxpayers and Students

ATRA: K-12 Cash Balances Could Help Close FY 2010 Deficit

Center for Arizona Policy: State Saving Millions Because of Scholarship Tax Credits!

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