In the United States, scholarship tax credits, also called tax credit scholarships, education tax credits or tuition tax credits, are a form of school choice that allows individuals or corporations to receive a tax credit from state taxes against donations made to non-profit organizations that grant private school scholarships. At the start of the 2014–2015 school year, fourteen states had scholarship tax credit programs.
The first scholarship tax credit program was Arizona's Personal Tax Credits for School Tuition Organizations program, which has been in operation since 1997. [1] In 2001, Florida created the second Scholarship Tax Credit program by enacting the Florida Tax Credit Scholarship Program. [2]
On April 4, 2011, the Supreme Court of the United States upheld Arizona's Personal Tax Credits for School Tuition Organizations program in Arizona Christian School Tuition Organization v. Winn. [3] The plaintiffs challenged that the use of tax credit scholarships to send children to religious schools violates the establishment clause. The district court originally dismissed the claim, but the Ninth Circuit court reversed the decision, ruling that the plaintiffs had standing to sue by citing Flast v. Cohen. The Supreme Court ruled 5-4 that the plaintiffs did not have standing to sue. Justice Kennedy, writing for the majority, explained that tax credits are not a form of government spending, and that donations to scholarship organizations are voluntary. As a result, no taxpayer is ever compelled to donate to such a program in violation of conscience and therefore no taxpayer can be harmed by the program. But plaintiffs must be able to demonstrate harm in order to have standing to sue, and so the case was dismissed for lack of standing and the scholarship program was upheld.
On March 12, 2009, Arizona's Corporate Tax Credits for School Tuition Organizations was upheld by the Arizona Court of Appeals in Green v. Garriott. [4] The Arizona Supreme Court refused to hear the appeal. [5]
State | Program | Enacted | Credit Value | Means-Tested |
---|---|---|---|---|
Alabama | Alabama Accountability Act of 2013 Tax Credits for Contributions to Scholarship Granting Organizations | 2013 | 100% | 150% Median Household Income |
Arizona | Personal Tax Credits for School Tuition Organizations | 1997 | 100% | No |
Arizona | Corporate Tax Credits for School Tuition Organizations | 2006 | 100% | 185% Free and Reduced Lunch federal eligibility guidelines |
Arizona | Lexie's Law Corporate Tax Credits | 2009 | 100% | No |
Arizona | "Switcher" Individual Income Tax Credit Scholarship Program | 2012 | 100% | No |
Florida | Florida Tax Credit Scholarship Program | 2001 | 100% | Free and Reduced Lunch federal eligibility guidelines |
Georgia | Private School Tax Credit for Donations to Student Scholarship Organizations | 2008 | 100% | No |
Illinois | Invest in Kids Act Tax Credit Scholarship | 2017 | 75% | 185% Poverty, or 300% Poverty for residents in Focus Districts |
Iowa | School Tuition Organization Tax Credit | 2006 | 65% | 300% Poverty Limit |
Indiana | School Scholarship Tax Credit | 2010 | 50% | 200% Free and Reduced Lunch federal eligibility guidelines |
Kansas | Tax Credit for Low Income Students Scholarship Program | 2014 | 70% | 100% Free Lunch Program |
Louisiana | Tax Credit for Donations to School Tuition Organizations | 2012 | 100% | 250% Poverty |
New Hampshire | School Choice Scholarship Program | 2012 | 85% | 300% Poverty |
Oklahoma | Oklahoma Equal Opportunity Education Scholarships | 2011 | 50% | 300% Free and Reduced Lunch federal eligibility guidelines |
Pennsylvania | Educational Improvement Tax Credit | 2001 | 75%/90% | $60,000 Household Income |
Pennsylvania | Educational Opportunity Educational Opportunity Scholarship | 2012 | 75%/90% | $60,000 Household Income |
Rhode Island | Tax Credits for Contributions to Scholarship Granting Organizations | 2006 | 75%/90% | 250% Free and Reduced Lunch federal eligibility guidelines |
South Carolina | Educational Credit for Exceptional Needs Children | 2013 | 100% | Student must have a disability (as defined by South Carolina Department of Education) |
Virginia | Educational Opportunity Scholarship Tax Credits | 2012 | 65% | 300% Poverty |
As of September 2, 2014 [6]
Children raised in the foster care system of various states are not provided the funding for school choice. Recently many states have instituted voucher programs or scholarship programs allowing a foster family to choose a private school which is paid for with a scholarship or voucher. Special needs scholarships assist children in the foster care system as well as children with disabilities. [7]
State | Program | Enacted | Value |
---|---|---|---|
Arizona | Empowerment Scholarship Accounts | 2011 | 90% |
Florida | John M McKay Scholarship | 2011 | 100% |
Georgia | Special Needs Scholarship | 2007 | 100% |
Louisiana | School Choice | 2010 | 50% |
Ohio | Autism Scholarship | 2003 | $20,000 |
Oklahoma | Scholarship for Students with Disabilities | 2010 | 100% |
Utah | Special Needs Scholarship | 2005 | 100% |
Other federal tax credits exist to help the special needs children including the adoption tax credit and the proposed Special Needs Tax Credit.
A school voucher, also called an education voucher in a voucher system, is a certificate of government funding for students at schools chosen by themselves or their parents. Funding is usually for a particular year, term, or semester. In some countries, states, or local jurisdictions, the voucher can be used to cover or reimburse home schooling expenses. In some countries, vouchers only exist for tuition at private schools.
School choice is a term for education options that allow students and families to select alternatives to public schools. It is the subject of fierce debate in various state legislatures across the United States.
In law, standing or locus standi is a condition that a party seeking a legal remedy must show they have, by demonstrating to the court, sufficient connection to and harm from the law or action challenged to support that party's participation in the case. A party has standing in the following situations:
The Freedom From Religion Foundation (FFRF) is an American nonprofit organization, which advocates for atheists, agnostics, and nontheists. Formed in 1976, FFRF promotes the separation of church and state, and challenges the legitimacy of many federal and state programs that are faith-based. It supports groups such as nonreligious students and clergy who want to leave their faith.
The Institute for Justice (IJ) is a libertarian non-profit public interest law firm in the United States. It has litigated ten cases before the United States Supreme Court dealing with eminent domain, interstate commerce, public financing for elections, school vouchers, tax credits for private school tuition, civil asset forfeiture, and residency requirements for liquor license. The organization was founded in 1990. As of June 2016, it employed a staff of 95 in Arlington, Virginia and seven offices across the United States. Its 2016 budget was $20 million.
Clint Bolick is a justice of the Arizona Supreme Court. Previously, he served as Vice President of Litigation at the conservative/libertarian Goldwater Institute. He co-founded the libertarian Institute for Justice, where he was the Vice President and Director of Litigation from 1991 until 2004. He led two cases that went before the Supreme Court of the United States. He has also defended state-based school choice programs in the Supreme Courts of Wisconsin and Ohio.
Zelman v. Simmons-Harris, 536 U.S. 639 (2002), was a 5–4 decision of the United States Supreme Court that upheld an Ohio program that used school vouchers. The Court decided that the program did not violate the Establishment Clause of the First Amendment, even if the vouchers could be used for private religious schools.
Allen v. Wright, 468 U.S. 737 (1984), was a United States Supreme Court case that determined that citizens do not have standing to sue a federal government agency based on the influence that the agency's determinations might have on third parties.
H. William Burgess was an attorney who lived in Hawaii. He opposed the Hawaiian sovereignty movement and of government programs that benefit Native Hawaiians. Burgess brought two lawsuits seeking to have such programs declared unconstitutional.
Hein v. Freedom From Religion Foundation, 551 U.S. 587 (2007), was a decision by the United States Supreme Court which ruled that taxpayers do not have the right to challenge the constitutionality of expenditures by the executive branch of the government. The issue was whether taxpayers have the right to challenge the existence of the White House Office of Faith-Based and Community Initiatives. The case centered on three Supreme Court precedents: Flast v. Cohen, Bowen v. Kendrick, and Valley Forge Christian College v. Americans United for Separation of Church & State.
The Alliance for School Choice is the largest organization in the United States promoting school choice programs. The Alliance for School choice supports the creation and expansion of school voucher, corporate tax credit, and other school choice programs. The organization is headquartered in Washington, DC, is designated as a 501(c)(3) nonprofit organization, and receives its funding through private individual and foundation donations.
Thomas Charles Horne is an American attorney, politician, and Republican activist who served as the 25th Attorney General of Arizona from 2011 to 2015. Horne lost to Mark Brnovich in the Republican primary for Attorney General in 2014. He previously served as the Arizona Superintendent of Public Instruction from 2003 to 2011. Horne was elected to another term as Superintendent of Public Instruction in 2022.
EdChoice, formerly the Friedman Foundation for Educational Choice, is an American education reform organization headquartered in Indianapolis, Indiana. It was founded in 1996 by economist spouses Milton and Rose D. Friedman. The organization's mission is to advance "school choice for all children" nationwide.
Kevin G. Welner is professor of education at the University of Colorado Boulder School of Education, where he chairs the Educational Foundations Policy and Practice program area. He co-founded and is Director of the National Education Policy Center. He has authored or edited 11 books and more than 100 articles and book chapters concerning education policy and law.
Arizona Christian School Tuition Organization v. Winn, 563 U.S. 125 (2011), is a decision by the Supreme Court of the United States involving taxpayer standing under Article Three of the United States Constitution.
Mueller v. Allen, 463 U.S. 388 (1983), was a United States Supreme Court case examining the constitutionality of a state tax deduction granted to taxpaying parents for school-related expenses, including expenses incurred from private secular and religious schools. The plaintiffs claimed that a Minnesota statute, allowing tax deductions for both public and private school expenses, had the effect of subsidizing religious instruction since parents who paid tuition to religious schools received a larger deduction than parents of public school students, who incurred no tuition expenses.
Step Up for Students is a 501(c)3 nonprofit in Florida providing low income students, bullied students and students with special needs with scholarships to help pay tuition for private school, assistance to attend an out of district public school, or for tutoring, textbooks or therapies. Step Up For Students was created as part of a merger between Florida's two largest scholarship organizations Florida P.R.I.D.E and Children First, which was founded by Tampa Bay businessman John Kirtley. Kirtley had founded a previous scholarship organization, Children's Scholarship Fund of Tampa Bay in 1998 and received more than 15,000 applications for 750 available scholarships. The large demand led Kirtley to help push for the creation of the Florida Tax Credit Scholarship, which was signed into law in 2001. That scholarship program allows donors to receive dollar for dollar tax credits for contributions to nonprofits offering scholarships to low-income students in Florida. The scholarship was capped at $50 million for the 2002-03 school year and scholarships were awarded to 15,585 students.
King v. Burwell, 576 U.S. 473 (2015), was a 6–3 decision by the Supreme Court of the United States interpreting provisions of the Patient Protection and Affordable Care Act (ACA). The Court's decision upheld, as consistent with the statute, the outlay of premium tax credits to qualifying persons in all states, both those with exchanges established directly by a state, and those otherwise established by the Department of Health and Human Services.
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