Carl Davis, research director of the Institute on Taxation and Economic Policy, reviews tax credits for vouchers and concludes that they are a tax avoidance scheme for the wealthy.
Key findings
• Lawmakers in several states are discussing enacting or expanding school voucher tax credits, which reimburse individuals and businesses for “donations” they make to organizations that give out vouchers for free or reduced tuition at private K-12 schools. In effect, these credits allow contributing families to opt out of paying for public education and other public services.
• New data—published here for the first time—reveal that wealthy families are overwhelmingly the ones using these credits to opt out of paying tax to public coffers. In all three states providing data, most of the credits are being claimed by families with incomes over $200,000.
• Wealthy families’ interest in these programs is being driven partly by a pair of tax shelters that can make “donating” profitable. These shelters hinge on stacking state and federal tax cuts and are being advertised in the states as a way to get a “double tax benefit” and “make money” in the process. This kind of language is a far cry from most nonprofit fundraising pitches and gives some sense of the supersized nature of the tax benefits being offered for private and religious K-12 schooling.
• Voucher tax credits are without merit and should be repealed. Short of that, states can end their use as profitable tax shelters with straightforward reforms. A national solution to this problem, however, will require action by the IRS.
One of the most disturbing recent shifts in U.S. public policy has been the renewed push to privatize the nation’s K-12 education system.[1] Originally born out of a desire to preserve school segregation and racial inequality more broadly, the so-called “school choice” movement is enjoying a resurgence as many state lawmakers look for ways to move more kids into private and religious schools.[2] That end is being hastened through the tax code in major ways. In short, school privatization proponents have managed to set up state policies that harness deficiencies in federal tax law and the self-interest of wealthy families to gin up enthusiasm for privatizing the U.S. public education system.
Voucher Tax Credits
State voucher tax credits are among the most significant tools eroding the public education system and propping up private schools. These policies are on the books in 21 states and proposals to create or expand them are being discussed this year in places like Alabama, Georgia, Kansas, Montana, Nebraska, South Carolina, and Texas.[3]
Voucher tax credits reimburse individuals and businesses for “donations” they make to organizations that give out vouchers for free or reduced tuition at private K-12 schools—the overwhelming majority of which are religious in nature.[4]
Unlike charitable gifts to other causes where taxpayers save less than 10 cents in state taxes for every dollar donated, these supersized incentives often give private school “donors” their full donation back. This unusual payoff scheme necessitated a whole new set of regulations from the IRS to enforce the commonsense notion that families being reimbursed for their “gifts” have not done anything genuinely charitable and should not receive federal charitable deductions.[5] Before those regulations took effect, it was common for private schools to tell wealthy families that pairing voucher credits with the federal charitable deduction was a great way to “make money.”[6]
While the IRS has taken steps to prevent taxpayers from misusing the charitable deduction in combination with these state tax credits, significant tax avoidance is still occurring through less-scrutinized channels. The fact that these programs continue to allow many high-income taxpayers to turn a profit for themselves is helping accelerate the diversion of public funding into private schools. States have the power to prevent aggressive tax avoidance through their voucher tax credits, as explained below, but many have turned a blind eye in the interest of maximizing growth in these programs.
A Subsidy for the Wealthy
Despite voucher tax credits’ charitable facade, the reality is they allow wealthy families to opt out of paying for public education and other public services, and to redirect their tax dollars to private and religious instruction instead. If a taxpayer sends $1,000 to a private school organization and receives a $1,000 state tax credit in return, the plain result of that is that the tax dollars have been rerouted away from public coffers and to private organizations instead.
We now know that wealthy families are overwhelmingly the ones using these credits to opt out of paying tax to public coffers because new data—published here for the first time—that we’ve obtained from tax agencies in three states show exactly that.
Please open the link and read the rest of this important study and analysis.
Diane Ravitch's blog 
Agree, Diane linked to an “important study and analysis.”
Then, there are the politicians who implement education policy, the state judges who interpret law and the voters who elect them-
From the Fordham Institute site, “A 5 Point Plan to Resuscitate Catholic Schools” (2014). ” The article’s 4th point includes, “…engage more successfully in public policy…that benefits Catholic schools…vouchers…amending state charter laws to allow religious charter schools…”
The Catholic Church is patriarchal and overtly discriminates against women. Thirty percent of Catholic schools are single sex. There are almost 50 state Catholic Conferences politicking in state capitols. The Koch funded Paul Weyrich was right wing Catholic. His training manual which recommends parallel schools is posted at Theocracy Watch. Leonard Leo of the Federalist Society is conservative Catholic.
There is a political axiom that the way you get what you want is to hide it in a much larger policy or funding bill to divert people from the real goal. I’ll give an example that’s positive. In the late 90s, a senator wanted to figure out how to dramatically increase cancer research. He realized it would only be possible if couched in a proposal to benefit all medical research, because by picking one, it would make envious enemies of the constituencies not covered. So in the end, after five years, cancer research was doubled, but it was only a percentage of what was in the final law. Much the same is going on with vouchers, only there is nothing positive to report.
The reason vouchers are succeeding is because they are a lifeline to Catholic schools and further erode the virtually nonexistent separation from the state. Yes, they will not reap the most of voucher funds. But they will get the cut they hoped for in the beginning. By hiding in larger legislation, it’s harder to separate them.
Greg
Thanks for adding to my understanding. A sceptic may agree with you and view it as more nefarious. To the extent that libertarians may be involved in the religious right’s funding, it’s about more than a slice of the pie for Christian/Catholic schools.
The right wing Catholic majority on SCOTUS have a agenda that will keep the current power structure in place. Catholic schools are one piece.
The Hill, 3-21-2023, “Abbott Elementary goes all in against charter schools”
Best pr our team ever had!!
Can’t be beat!
With luck, the producers at Abbott Elementary will tweak the idea for another program set at a university like Harvard. The program will have some honest, earnest professors. And then, the comic part could be a character like Abbott’s principal. That character will be ethics-challenged- a professor who intellectually prostitutes him/herself for grants from the wealthy.