Mero Moment: Tax Credits Are Not Vouchers

This week I want to talk about tuition tax credits. The Salt Lake Tribune recently reported that a letter had been sent by Education Interim Committee chairmen Senator Howard Stephenson and Representative Bill Wright to legislative leaders requesting permission to study several issues, including granting tax credits to parents who spend their own money (in addition to the money they pay in taxes) on a child’s education.

And what’s been the response of those who oppose this education tax credit concept? Well, of course, they cry “vouchers!”

“Voucher” refers to a Utah law passed by the Legislature and signed by Governor Jon Huntsman in 2007, later overturned in a public referendum, granting vouchers for tuition to parents whose children attend private schools. And now, people opposed to the tax credit concept are trying to paint the tax credits as a voucher.

Tribune reporter Robert Gehrke flat out calls these tax credits “private school vouchers.” And his editors opine that “a group of conservative Republican legislators is committed to the idea of siphoning public money into private schools. It means little to them that voters overwhelmingly rejected their last attempt to further diminish the state’s paltry support for public schools.”

Tax credits, as anyone who files a tax return understands, are when the government returns a portion of your tax bill to you for choosing to spend your own money on something the Legislature believes benefits society. In this case, that behavior is a parent spending her own money to help a child get a better education including paying for school supplies or outside tutoring.

Vouchers, on the other hand, are checks sent directly from the government to a private school, on a parent’s behalf, to help pay for a child’s tuition. Vouchers are available exclusively to those at private schools, and non-tuition expenses are not covered.

These are significant, if subtle, policy differences. Tax credits go directly to parents, and can directly reward any parent, whether their child attends a public, private or home school. Vouchers, by definition, go directly to private schools, and only those at private schools get direct benefits. Tax credits can potentially apply to any number of education expenses, including tuition, supplies, extra tutoring, etc. While vouchers, by definition, apply only to private-school tuition.

For these reasons, among others, we don’t call tax credits “vouchers.” (By the way, you don’t ever hear the federal child tax credit referred to as a “child expense voucher.”) “Voucher” means something different from “tax credit,” in both practical and policy terms.

In a rather cynical political move, the opponents of the education tax credit concept are betting that people won’t get it. They think they can ignore these realities and kill policies they don’t like with negative political buzz words, regardless of how accurate they are. Only time will tell whether they’re right.

For Sutherland Institute, I’m Paul Mero.