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In his budget for fiscal year 2003, President Bush proposed a refundable tax credit. Parents are eligible if they transfer a child from an identified failing public school to a private school, including those with a religious affiliation, or another public school. If enacted by Congress, the tax credit would refund up to 50 percent, or $2,500, of the first $5,000 in tuition, fees and transportation costs directly to the parent. The President estimates that the program will cost $3.7 billion over five years.

The tax credit would work like a refund check and be available to any eligible parent, regardless of income bracket. Because the money goes directly to the parent, the program sidesteps the potential Constitutional question that a voucher program for private schools would raise, but could still have serious church-state implications.

This tax credit could hurt public education and undermine accountability for how public education dollars are spent. In fact, public schools and public school children could be victims, rather than beneficiaries. Rather than proposing the federal money promised in the No Child Left Behind Act, the President’s budget takes money that could be used for public schools and the education of at-risk children and proposes to indirectly invest in private schools. Unlike public schools, private schools are not accountable to taxpayers and are certainly not subject to the accountability reforms enacted in the No Child Left Behind Act.

Alliance Position:


Instead of funding a new tax credit proposal, it would make more sense to spend the $3.7 billion on Title I which has already been signed into law and has clear accountability measures in place. The process of achieving Congressional approval for the President’s new tax credit will only delay the help students in failing schools need immediately. Congress cannot afford to entertain new proposals until the promises they have made in the No Child Left Behind Act have been kept.


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