The House Revenue and Taxation Committee is considering legislation that would allow income tax payers in the state to receive a partial tax credit in exchange for donations made for private school scholarship programs.
In addition to allowing the 50 cent on the dollar tax credit, House Bill 507 would also provide the legal basis for establishing state-regulated “scholarship granting organizations” that would collect private donations and disperse student scholarships.
“For every dollar you donate, you’d get a 50-cent tax credit,” explained Rep. John Vander Woude, R-Nampa.
Last year Sen. Bob Nonini , R-Coeur d’Alene, presented a similar bill to the House committee, the main difference was that it allowed for a full dollar-to-dollar tax credit. That legislation, House Bill 286, narrowly passed in the full House, but failed in the Senate.
Opponents of children’s scholarship programs and tuition tax credits characterize the legislation as an attempt to entice Idaho public school students to switch to private schools. Supporters note that such programs allow children to leave public schools they don’t wish to attend, while providing parents and taxpayers more choices over how their money is spent and where their children are educated.
Opponents also claim that such tax credits take funds away from already cash-strapped public schools. Vander Woude says that the program will actually save money for the state’s public schools. “For every dollar donated, a public school will save a dollar because granting the scholarships will result in fewer students burdening the public schools, all the while a donor will only receive 50 cents worth of a tax credit for their dollar donation.”
Under the plan proposed by Vander Woude, students could use the donated scholarship funds at both religious and secular schools, a point that some legislators find troublesome.
Rep. Grant Burgoyne, D-Boise, is one of them. “I am opposed to the bill because I feel it provides a subsidy to private religious schools.” Burgoyne is also a member of the House committee.
House Bill 507 is patterned after a similar law that was enacted in Arizona in 1997, the first tuition tax credit law of its kind, and Arizona’s law has withstood the test of the nation’s highest court.
While the U.S. 9th Circuit Court of Appeals determined that Arizona’s tuition tax credit law unconstitutionally funded religious education, the U.S. Supreme Court argued that within the tuition tax credit system donated funds go from the donor to a qualifying student without ever being possessed by the government—so, therefore, the funds that subsidize religious schools are not government funds.
"When Arizona taxpayers choose to contribute [to a school tuition group], they spend their own money,” wrote Justice Anthony Kennedy of the United States Supreme Court in 2011. Since that ruling, Arizona’s tuition tax credit law has either been replicated, or emulated, in nine other states. Arizona’s tuition tax credit law provides a dollar-for-dollar tax credit to donors.
“This is a win-win-win for everybody,” said Shelly Matthews of Coeur D’Alene. Matthews serves on the board of directors for the Idaho Federation of Independent Schools. She told IdahoReporter.com that “this bill would provide more choices for parents and students, and it also alleviates a burden for overcrowded public schools.”