Study outlines benfits of a tuition tax credit program

The St. Louis based Show Me institute released a study titled "The Fiscal Effects of a Tuition Tax Credit Program in Missouri". A tuition tax credit program has been proposed for Missouri and it looks like it would be a real asset to the state. In the past 10 years, four other states have enacted this law. First, lets remember the St. Louis School District was unaccredited last year. It is a major problem when that happens obviously. But what some don't realize is that those students are stuck there. The constitution says they should be allowed to leave an unaccredited district, which they are, but it does not specify other schools accepting them. So, now these students are left in those failing schools, with no where to go.

A tuition tax credit program would give Missourians who contribute to scholarship granting organizations (SGOs) a credit on their state income tax bills. The SGOs then will use these contributions to provide private school scholarships to various students. The Show Me study proves states with this program have reduced inequality of educational services among low income families. Private schools can be expensive, so lower income families cannot afford to send their children to them. So the students are suffering because of it. The study also tries to show how it would save the state millions of dollars.

The fiscal cost of a tuition tax credit program will depend on the number of parents who move their children from public schools to preferred private alternatives. This study assesses how the size of available scholarships would affect state educational spending at various levels of demand. Under the conditions we consider, a tuition tax credit program has the potential to save the state $7 million per year. Savings from a partial tax credit, in which taxpayers receive less than a dollar-for dollar match on their contributions, may be as high as $17 million.

Over the past 8 or so years, many tuition tax credit bills have been introduced, and although none of them have passed so far, there is still hope. This study focuses on the 2007 bill and what it could do for Missouri.

This study explores the economic benefits of a tuition tax credit program for Missouri by discussing the structure of similar programs implemented in other states. We argue that a tuition tax credit program would benefit Missouri by providing low-income families with additional education choices. Surveys demonstrate that Missourians support school choice legislation, and that this support is strongest among low-income households and minorities.8 Improved public education would benefit all Missourians, but the greatest returns would flow to students in economically disadvantaged homes — those traditionally most affected by failing public education.

Hopefully, Missourians will realize the benefits of this type of program. Education is too important not to.