School Choice & Tax Credits

I don’t like the school choice movement. At best, I have seen it generate results comparable with public education; at worst, I have seen it drain the best teachers and students out of struggling school districts. I’ve watched property tax revenue circle the drain as parents yank their children out of public schools, which only makes things worse. Death spirals aren’t limited to health care debates.

Georgia has had it’s share of problems with charter schools, same as everywhere else. Maybe I’m just biased. But we aren’t talking about schools today, not really. We’re talking about taxes. Specifically, tax credits.

Setting the Stage

HB 1133 was introduced in the 2007–2008 General Assembly by David Casas (R-10), and it rewrites portions of Titles 21 and 48 (regarding education and tax credits, respectively). Specifically, it authorizes a tax credit of $1,000 (or $2,500 for couples filing jointly) for donations made to eligible Student Scholarship Organizations (SSOs).

Now, here’s the thing — SSOs count as 501(c)(3) organizations — tax exempt charities — which, as we all know, are favorites of people who have lots of money but don’t like paying taxes. The purpose of an SSO is to take in charitable contributes and distribute them as scholarships, which, I think we can all agree, is a Good and Admirable Thing To Do. The tax credit, then, is just a little extra encouragement to push money into these programs.

The Problem

Of course, if you spend even a little time thinking about it, this seems like an opportunity for some pretty serious fraud. A less-than-upstanding person could donate money to an SSO, which could then turn around and spend that money on a specific child — like, say, the child of the person who just donated the money. It’s a pretty sweet deal, I guess; like, you COULD pay tuition for your kid’s fancy Buckhead private school, or you can give it to an SSO to spend the money for you and then deduct it from your taxes. The extra thousand bucks is just a little extra grease for the wheel.

Obviously, the bill’s writer’s thought of that. Which is why O.C.G.A § 48–7–29.16 (d) (2) includes the following language (emphasis mine):

In soliciting contributions, a student scholarship organization shall not represent, or direct a qualified private school to represent, that, in exchange for contributing to the student scholarship organization, a taxpayer shall receive a scholarship for the direct benefit of any particular individual, whether or not such individual is a dependent of the taxpayer. The status as a student scholarship organization shall be revoked for any such organization which violates this paragraph.

All cleared up, right? The SSO can’t “represent” — that is, it can’t promise, imply, or suggest — that any of the money will go to a specific person. But, crucially, the statute doesn’t say that the SSO CAN’T do that. In fact, the whole point is for them to give the money to specific individuals. There is nothing — literally, and legally, nothing — that stops an SSO from taking a parent’s donation and putting it right back into their child’s pocket. As long as they don’t SAY they’re going to do it, there’s no problem.

So we’re back to the original problem of fraud; instead of money going from the parent to the school, the money goes from the parent to an SSO to the school and then back into the parent’s pocket in the form of a tax deduction (AND a $1,000 tax credit, which, when compared to the amount of money you’re likely to write off, is almost insulting).

Private school tuition in Atlanta can go as high as $55,000 a year. That’s an outlier, but the average still works out to $15,717 a year — not pocket change. Being able to kick almost $16,000 off your taxes? Every year? This AJC article from 2009 makes the breathless concern over parents scamming the state a thousand dollars at a time seem almost quaint.

The Case

The case in question hinged on a handful of charges. First, the plaintiffs alleged that the program was an improper use of state funds. Second, they argued that the program “provides unconstitutional gratuities to students…by allowing tax revenue to be directed to private school students without recompense, and also that the tax credits authorized by HB 1133 result in unauthorized state expenditures for gratuities.” Third, they asserted that the whole program violated the Establishment Clause in the Georgia Constitution, arguing that since a lot of private schools are religious, this constituted state money funding a religious organization. Finally, they alleged that SSOs had improperly directed funds towards specific individuals in contravention of O.C.G.A § 48–7–29.16 (d) (2), and they demanded a mandamus relief to “revoke the status of SSOs that have made representations that are allegedly unlawful.”

The court said, functionally, “Forget it.”

The court’s reasoning, in order:

 1. No, it’s not;
 2. No, they aren’t;
 3. No, it doesn’t;


4. That never happened.

Read the decision — it’s not long.

It’s frustrating, but the inarguable fact is that the plaintiffs basically weren’t able to prove any wrongdoing, so this sleazy behavior has to stand. Which is a shame. This is all part of a larger piece of the school choice movement, which, at its rotten core, is rooted in racism and greed (if you want a chuckle, you can read a bad-faith defense of school vouchers which strives to completely ignore private schools and focus on the admittedly sad truth that “Public schools are bad too!”).

States might be the laboratories of democracy, but it’s in their schools that they truly demonstrate their commitment to those principles. In this country, far too often, we fail at that. And that couldn’t be more dangerous, because we aren’t failing ourselves, we’re failing our children.