Arizona Senate to Consider Doubling Tuition Tax Credit

Arizona Senate to Consider Doubling Tuition Tax Credit
February 3, 2012

Rachel Sheffield

Rachel Sheffield (rachel.sheffield@heritage.org) is an education research assistant at The Heritage... (read full bio)

Arizona state Sen. Rick Murphy (R-Glendale) has proposed expanding the state’s tax credit for individuals donating money towards K-12 private school tuition because. Currently, demand for the resulting scholarships exceeds the program cap. Murphy’s proposal passed the Senate Finance Committee on January 12 and awaits a vote from the full state Senate.

“We still are a long way from making quality choices available to all of the 1 million public school students in Arizona,” said Jonathan Butcher, education director for the Goldwater Institute. “We have over 180 low performing schools serving some 94,000 students, so this bill is another way to make quality choices available to every student.

Arizona already has an individual tuition tax credit, a similar corporate tax credit, and the nation’s first Education Savings Accounts (ESAs), which allow parents to divide their child’s state education dollars among approved providers.

“The goal is to help get students off of waiting lists and serve more students,” Butcher said.

Targeting Public School ‘Switchers’
The current tax credit allows individuals to receive a dollar-for-dollar tax credit up to $500 (or $1,000 for a couple) for contributions they make to scholarship granting organizations. Children then use these scholarships to attend a private school of their family’s choice.

Murphy would double the amount of the tax credit a family could receive, by allowing couples to receive a tax credit for donating up to $2,000. The extra $1,000 has limits, though: The scholarship organizations that receive the money must direct it to a student moving from public to private school.

“The expansion is a new way to help ‘switchers’—students moving from traditional public schools to private schools,” Butcher said.

State Savings, Family Control
This saves the state money because $2,000 in lost taxes is still a little less than half of Arizona’s per-pupil public school allotment.

In addition to saving the state money, an education tax credit for individuals and not only scholarship donations essentially “allows a family to keep more of their hard-earned money to use on education for their children,” noted Will Estrada, director of federal relations at the Home School Legal Defense Association.

Although Murphy’s plan is limited to donations for private school tuition, “State tax credit legislation should be written to apply to all families, whether the children attend a public, private, or homeschool,” Estrada said. “When parents are able to make the educational decisions for their children—and receive a tax credit while doing so—families and children benefit."

Demand Spurs Excellence
The likely reason demand for school choice in Arizona is outpacing supply is that school choice provides families with better education opportunities, said Lance Izumi, education studies director at the Pacific Research Institute.

“The most rigorous research evidence overwhelmingly shows that increased school choice opportunities improve the quality of students' education and their achievement,” he said. “Expanding choice options should be a chief goal of policymakers, in Arizona or in any other state, and celebrated when it is achieved.” 

Image by Christopher Michel.

Rachel Sheffield

Rachel Sheffield (rachel.sheffield@heritage.org) is an education research assistant at The Heritage... (read full bio)