GOP in Congress to offer $5 billion education tax credit

Ingrid Jacques
The Detroit News

The Trump administration is following through on a campaign promise to expand K-12 school choice for families, which it is calling a “historic investment in America’s students.”

Sen. Ted Cruz, R-Texas, and Rep. Bradley Byrne, R-Alabama, are introducing legislation Thursday that would create “Education Freedom Scholarships,” a $5 billion annual federal tax credit. 

Ted Cruz

This would not be a new federal program, but it would establish a tax credit to support state‐designed and managed programs, according to sources in the U.S. Department of Education.

The scholarship program would offer the tax credit for voluntary donations to state-based scholarship programs. States would decide whether to opt in, and would have significant leeway in determining the kinds of school choice opportunities they want to create.

Tax credit scholarship programs already operate in 18 states, and they have been supported strongly by Education Secretary Betsy DeVos. This legislation stems from the Michigan native’s vision, and her experience in helping to expand school choice prior to joining the Trump administration.

U.S. Secretary of Education Betsy Devos

The state-run programs offer taxpayers -- both individuals and businesses -- tax credits when they donate to nonprofits that in turn offer scholarships to private schools. In some states, these programs also offer grants to public schools and can give students transportation assistance, according to Ed Choice, an advocate for school choice nationally.

That’s how the Education Freedom Scholarships would operate.

According to documents obtained by The Detroit News, the proposal would do the following:

  • “Individual and business taxpayers nationwide would contribute to student scholarships through state‐identified Scholarship Granting Organizations. Such contributions would be eligible to receive a non‐refundable, dollar‐for‐dollar federal tax credit, but no contributor would be allowed a total tax benefit greater than the amount of their contribution.”
  • “Families would receive and control the use of scholarships for their child’s elementary and secondary education.”
  • “Privately funded scholarships would improve the educational experiences of students across the country, without taking a single dollar away from public schools and the students who attend them.”

Proponents of the legislation say every aspect of the program is voluntary and would be locally driven -- customizable for the needs in each state.

States that choose to participate could determine how they would structure their own program, including what students would be eligible, what education providers would be included, in addition to qualifying education expenses.

Sources say some of the ways states could expand students’ access to educational opportunities would include: advanced, remedial and elective courses; apprenticeships and industry certifications; concurrent and dual enrollment; private and home education; special education services and therapies; and transportation to education providers outside of a family’s zoned school. Tutoring and summer classes are also options.

Even states like Michigan, which have traditionally banned any form of state dollars from going to private schools, could sign on to the federal tax credit without running afoul of the state constitution, says Ben DeGrow, education policy director at the Mackinac Center for Public Policy.

Michigan’s constitutional amendment barring funds -- direct or indirect -- to nonpublic schools is one of the strictest so-called Blaine amendments in the country.

But if Congress passes this scholarship program, it has the potential to open up school choice possibilities in states like Michigan.