Author ORCID Identifier
Michael Broyde 0000-0001-9960-7256
School choice, Tax credit, Private schools, Georgia, First Amendment, Supreme Court
School choice is on the rise, and states use various mechanisms to implement it. One prevalent mechanism is also a uniquely problematic one: the tax credit. Tax credits are deficient at equitably distributing a benefit like school choice; they are costly, and they invite fraud. Instead of using tax credits, states opting for school choice programs should use direct funding. Direct funding will more efficiently achieve the goals of school choice because it can be regulated like any other government benefit, even if it ends up subsidizing religious private schools.
Tax credits’ prevalence is not inexplicable, of course. It is based on a prior legal understanding that states were constitutionally restricted from directly funding religious schools. Historically, states that wanted to include religious private schools in their school choice programs therefore felt pushed to use tax credits as their only constitutionally viable option. However, the landscape has changed. The Supreme Court held in 2022 that direct funding of religious private schools is not only constitutionally permissible, but it is required if a state funds non-religious private schools and provides no neutral basis for excluding religious ones. The initial reason for tax credits’ popularity therefore no longer exists; both tax credits and direct funding alike are constitutionally acceptable. It is time, therefore, to revisit the merits of tax credits and ask whether, knowing what we know now, it is worth disposing of them in favor of direct funding. This Article answers that question with a resounding yes. Tax credits carry significant disadvantages—specifically, inequitable distribution and difficulties in regulation—that direct funding does not. Now that the law is clear, states choosing to sponsor school choice should discontinue their use of tax credits in favor of direct funding.
Columbia Journal of Tax Law
Michael J. Broyde & Anna G. Gabianelli, The Worst Choice for School Choice: Tuition Tax Credits Are a Bad Idea and Direct Funding is Wiser, 15 Colum. J. Tax L. 77 (2024).