Report: Education Tax Credits Would Benefit Students and State

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Tax Credits Would Benefit Students and State

Special Report - April 10, 2008
North Carolina lawmakers should expand school choice in the state by offering parents education tax credits or incentives, according to a new report from the North Carolina Education Alliance (NCEA). The report, which was released at a press conference at the North Carolina General Assembly on April 8, argues that education tax credits are “fair, fiscally responsible and constitutional.” The NCEA report highlights two types of education tax credits: family education tax deductions or credits, which “enable parents to receive a deduction or credit against their state income taxes for a portion of their children’s education expenses;” and philanthropy education tax credits, which “provide income tax credits for individuals or businesses that donate to scholarship organizations that, in turn, give scholarships to low-income students to attend a school of choice.”

According to the report, education tax credit programs would help save the state money “because tax credits cost less than what it takes to educate a student in the public schools.” It shows that education tax credit programs in Pennsylvania, Arizona and Florida have saved these states $204 million since the programs began. In addition, the NCEA report notes that education tax credits are “consistent with North Carolina’s tax laws,” which already offer parents various tax incentives, including deductions for childcare and charitable contributions. It also argues that an education tax credit program in North Carolina is constitutional, noting that similar state programs “have been upheld as constitutional by state supreme courts and the U.S. Supreme Court.”

In addition to the education tax credits report, the NCEA also released a guide for parents that explains how education tax credits work, and why they are important for North Carolina.

“Education tax credits give the power of choice to low and middle-income parents and give their children a chance to succeed,” said NCEA Director Lindalyn Kakadelis. “Cost-effective, constitutional, and consistent with federal and state tax policy, tax credits enjoy bipartisan support among education reformers and parents. Opportunity is in the hands of North Carolina’s lawmakers.”