IP-2-2013 (February 2013)
Author: Ben DeGrow
Scholarship tax credits increase the opportunity for K-12 students to access non-public educational options. Such a tax code modification increases the incentive for persons and businesses to contribute funds to qualified non-profit scholarship granting organizations. In turn, the organizations use most of the incoming funds to assist low- and middle-income families with private school tuition expenses.
Currently, 11 states operate a total of 14 different scholarship tax credit programs. No two programs are alike, with different criteria for student eligibility, scholarship sizes, limits on the size or value of tax credits, and requirements for scholarship organizations. Though research has been limited, strong evidence exists that such programs yield academic and competitive benefits, generate a positive fiscal impact on the state, and improve parental satisfaction. No scholarship tax credit program has been overturned by a state or federal court.
Colorado has a great need to adopt a scholarship tax credit program. Important measures of achievement and attainment, especially among disadvantaged groups, continue to lag below expectations. Even the highest-performing schools do not serve every student well. Parents should be empowered to choose different educational settings that serve their children’s needs.
By harnessing the power of voluntary contributions, a scholarship tax credit program could open the doors of learning opportunity for thousands of Colorado students with no negative fiscal impact on the State. A model program would provide dollar-for-dollar tax credits to persons and businesses that contribute to qualified non-profit organizations that provide scholarships for K-12 non-public school tuition, as follows:
Colorado policymakers should give careful consideration to providing many of the state’s families an important benefit through the adoption of scholarship tax credits.