Tax Credits for Private and Religious Schools: A Policy Statement from the Secular Coalition for New York

 

The Secular Coalition For New York opposes S1976, the so-called “Educational Investment Incentives Act” as an impermissible back door public funding of religious education, an assault on the New York State public schools and an unjustified boon to wealthy private schools. This proposal is a closet voucher program; and while the courts have allowed vouchers in certain limited circumstances, this is not a public policy position that New York should embrace.

This legislation goes far beyond a simple tax deduction for a charitable contribution. A deduction only reduces the amount of income on which tax is paid, as with excessive medical bills. A tax credit is a direct reduction on taxes to be paid, and is the equivalent of an expenditure.

Tax credits are typically used by government to provide a strong incentive for an activity in which the target population would not ordinarily engage. As, for example, film production tax credits have brought Hollywood and New York to states that without credits would see few if any productions. The drawback of tax credits is that the rest of the taxpayers have to make up the shortfall, or deal with decreased state services, like decreased funding for public schools.

Tax credits are appropriately used to create economic activity which would not otherwise occur, and which through economic multiplier effects, bring in a net increase in state revenues. 

The “Educational Investment Incentives Act” is a scheme to allow a tax credit for contributions to a tuition reimbursement organization, which in turn gives the monies to students to attend private, and primarily religious schools. This is the functional equivalent of public funds flowing to religious education, because taxpayers can chose to either pay their taxes, or pay the money indirectly to religious education.

It is very poor public policy to use a tax credit to reward behavior that would occur without the incentive. We do not need to provide a governmental incentive for parents to send their children to religious schools. Not only are parents doing that anyway, but in our view, this would be an impermissible governmental support of religion. The tax credit is also much more valuable to high income taxpayers who pay a higher percentage of their income, so it is tax relief for those of higher incomes.

New York should reject this scheme as a poor public policy choice, as a state support of religion, as a drain on the funds available for public schools. It is a bad precedent of using tax credits not to provide an incentive, but to provide an unjustified reward for those who choose to avoid public schools.