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by Joseph P. Overton
Abusing language in pursuit of political goals is nothing new. To those for whom the end justifies the means, a false characterization is a potent political tool. But recent attempts by powerful interest groups to cloud the distinction between vouchers and tuition tax credits comes at a tremendous cost in terms of both sound public policy and the reputation of Michigan teachers.
When the Mackinac Center for Public Policy proposed a comprehensive school choice plan in November 1997, opponents of school choice were caught off guard. Groups such as the Michigan Education Association were expecting to wage war against a voucher plan using their 260-page anti-voucher organizing manual prepared by the National Education Association. The problem they faced was that the Mackinac Center plan was not a voucher; it was a tuition tax credit.
What to do? Call the tax credit a voucher and run with the anti-voucher plan anyway. And, since the union apparently understands that Michigan citizens find tax credits more favorable than vouchers as a means of advancing parental choice in education, they find their strategy doubly attractive. The MEA implemented this strategy by running advertisements statewide attacking the proposed tax credit as a voucher and a "scam."
So, what is the difference between a voucher and a tax credit? Let us examine them both.
Under the Mackinac Center's proposed Universal Tuition Tax Credit, any Michigan taxpayer, whether an individual or corporation, can claim a dollar-for-dollar tax credit against the state income tax, Single Business Tax, or 6-mill state education property tax, for tuition paid on behalf of a public or nonpublic K-12 student. This gives parents, especially low-income parents, greater ability to choose the best school for their children.
With a tax credit, the taxpayer pays tuition for a student at a public or nonpublic school, and when he calculates his taxes, he subtracts the amount paid in tuition (subject to a maximum limit of fifty percent of what public schools receive per student) from his tax liability. The state is not involved in writing checks or selecting the school. The taxpayer, having already made the funding of education a priority, is simply allowed to offset a portion of the taxes he pays to support the school system he does not use.
Tuition vouchers are distinctly different from tax credits. A voucher is a certificate from the government that can be redeemed for a certain amount of money. The most common form today is food stamps. The government gives a subsidy in this form to certain low-income families who take the stamps to the store and purchase food. The store then sends the food stamps to the government and receives a check from the government for the face value of the stamps in return. A tuition voucher would work much the same way, except that the voucher may be used only for school tuition.
A tax credit is more like a tax deduction than a voucher. The charitable contribution deduction and the home mortgage deduction are good examples. The federal tax code allows a taxpayer to pay less taxes if he donates to his church, an organization like the Salvation Army, or even to a nonprofit private school. If the taxpayer makes such a contribution, he pays less in taxes. No one calls this a "voucher." And no one complains that such a tax provision violates the separation of church and state. The simple fact is that this policy promotes charitable giving by reducing the tax burden on those who are helping others.
The same is true of the home mortgage deduction. No one calls this a "voucher" even though homeowners claiming the deduction pay less in taxes.
Michigan already has a tuition tax credit on the books, enacted with unanimous support of the legislature, but it applies only to tuition paid to public and private colleges, not K-12 schools. Nobody calls this a voucher and, again, nobody is raising questions about separation of church and state even though the credit may be claimed for tuition paid to faith-based colleges. The Universal Tuition Tax Credit simply seeks to expand and extend this credit to K-12 education.
Tuition tax credits also create very different effects than vouchers. For one, state and federal courts treat vouchers differently than tax credits with respect to questions of separation of church and state. Giving a tax credit for a contribution to a church is very different than having the government write a check to the church. Secondly, vouchers are more likely to be viewed as a rationale for regulating the entity that receives the subsidy. As one observer noted, "government shackles follow government shekels."
A tuition tax credit is not a voucher-never was and never will be. To claim otherwise suggests a desire to obfuscate, instead of illuminate, public debate.
Joseph P. Overton is a co-author of The Universal Tuition Tax Credit and senior vice president of the Mackinac Center for Public Policy, a research and educational organization headquartered in Midland.
