The myths and facts about education tax credits Skip to content

The myths and facts about education tax credits

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1) No Expansion of Choice for Low-Income Families 

Myth: Education Tax Credits will give low-income children trapped in failing public schools new choices, including the opportunity to go to private school.


  • Proposed tax credit levels of $200 to $1,000 fall far short of the average private school tuition of $6,631 at nonsectarian schools and $2,546 at religious schools.[1]  Poor and middle class families would barely see a dent in their potential tuition bill if they wanted to send their children to private schools.
  • The proposed scholarship programs will not help the families of poor and middle class students afford the incidental costs associated with private schooling. In Arizona, the state tax credit program has resulted in an average grant of only $856 per student.[2]  This will not even begin to cover the cost of tuition, books and uniforms.
  • Other barriers low-income families face in sending their children to private schools, like transportation, are unalleviated by tax credits.
  • Most of the money will likely go to students already enrolled in private schools.  According to a report by the Arizona State University Education Policy Research Unit, between 70% and 95% of that state’s tuition tax credit dollars go to the parents of students already enrolled in private schools.[3]

2) Diverting Public Money to Private Schools 

Myth: Education tax credits will be a source of revenue for low performing public schools.  


  • Education tax credits would divert money from public education, leaving less funding for proven reforms, like smaller classes, summer school, and teacher training.
  • With the variety of competing priorities facing the Federal government, it would be detrimental to the goal of “”leaving no child behind”” to divert precious funds from proven educational programs for the 90% of children educated in the public schools to subsidizing the private choices of wealthy parents.
  • Education tax credits will go to reimburse parents for costs they already pay, such as extracurricular activities costs, not money to start new programs.
  • Education tax credits will add a costly administrative burden to public school systems.  Public schools will be required to spend time and resources to provide parents with receipts and track parental payments rather than educating students.

Myth: Education tax credits will force failing public schools to compete for funding and therefore improve their performance.  


  • Competition might result in some “”winning”” schools, but many public schools are already severely under funded and more financial pressure will make it more difficult to improve the quality of education provided to students.
  • Educational reforms proven to result in better outcomes for children– smaller classes, summer school, and qualified teachers– cost money and cannot be achieved if the government spends money subsidizing the educational choices of a fortunate few instead of funding programs that positively impact the majority of America’s children.
  • A strong public education system provides benefits to the entire society, not just the individual students.  The potential consequences of leaving some children behind impact all of us.  We cannot afford to give a little money to some students who choose to leave the public schools while leaving others, especially the most needy, behind.

3) Leaving Many Children Behind 

Myth: Education tax credits offer children more choices and will expand the opportunities of all students.  


  • Even if a low-income family had the money, private schools can choose to admit only the best and brightest students, leaving other children behind.
  • Students with special needs, disabilities, or those for whom English is not their first language will not have more choices as a result of education tax credits.  Fewer private schools have programs to provide remedial programs or special education services.[4]
  • Private schools may admit students on any basis they choose, including on the basis of a child’s religion, sex, race, or handicap.

4) A Tax Break for the Wealthy 

Myth: Education Tax Credits will help all families pay for educational expenses.  


  • Families who do not make enough money to pay taxes will be unable to claim the credits, meaning the poorest families will not benefit.
  • Many middle class families who send their children to public school will also not benefit because they do not pay enough in eligible education expenses to claim the credits.
  • Those who will most benefit from the credits are the wealthy, who are most likely to send their children to private schools.

5) “”Public Money-Without Public Accountability””[5]

Myth: Private schools are accountable because they are dependant on the market for students.  


  • Private schools would receive tax dollars without any public oversight.  Private schools are not required to keep or release statistics on attendance, curriculum, test scores, or graduation rates, leaving the public uninformed as to whether or not their tax dollars are really being spent to improve the lives of children.
  • Private schools are not subject to standardized testing, curriculum standards, or graduation requirements.
  • Leave No Child Behind promised the use of scientifically proven educational methods.  Private schools do not have to use these methods or participate in studies to discover what are the best methods.
  • Private schools may employ uncertified teachers.

6)      Bad Tax Policy 

Myth: Parents who send their children to private school are paying twice, once for public school taxes and again for private school tuition.  


  • Public services are paid for by everyone, regardless of whether they use them or not.  Just as we would not give a tax rebate to people who buy books instead of using a public library or who own private vacation homes instead of camping in national parks, the government should not refund private school tuition to parents who choose not to send their children to public schools.
  • Education Tax Credits will further complicate the tax code.

7) Potential Scholarship Fund Fraud

Myth: Scholarship funds, or “”Education Investment Organizations,””[6] will not lead to fraud because parents cannot designate the money they donate to benefit their own children.


  • In Arizona, there is evidence that parents were able to get around this limitation by making agreements with friends to designate money for the friend’s child while the friend designated money to their child.[7]
  • While scholarship funds may use income as a criterion, the proposed law does not set any further limits on the use of scholarship funds and they therefore may be given to children already in private school, regardless of need.

8) Vouchers by Another Name 

Myth: Education Tax Credits are not the same as school vouchers.  


  • Education Tax Credits diverts funds that could otherwise be used to improve public education to subsidize the private choices of some parents thus having the same negative impact as a voucher program.


[1] Public and Private Schools: How Do They Differ? The Condition of Education, 1997. National Center for Educational Statistics, U.S. Department of Education.
[2] Arizona Department of Revenue
[3] The Equity Impact of Arizona’s Education Tax Credit Program: A Review of the First Three Years (1998-2000).  Education Policy Research Unit, Arizona State University College of Education.
[4] U.S. Department of Education.  See Note 1.
[5] Shaker, Erica Public Money-Without Public Accountability: Equity in Education Tax Credit.  Presentation to Ottawa Civil Liberties Union, Oct. 22, 2001.
[6] “”An educational investment organization (EIO) is any non-profit organization which awards grants for qualified expenses to elementary or secondary students.””  Rep. Shaffer’s Education Tax Credit Legislation Summary.
[7] Karina Bland, “”School Tax Credits Wide Open to Abuse: Millions Are Diverted From Needy Students,”” Arizona Republic, April 9, 2000.  See also A Model to Avoid: Arizona’s Tuition Tax Credit Law, People for the American Way Foundation, September 2001.

(This article was cross-posted from the ACLU web site, with permission.)
(Also see our Explainer on the difference between tax deduction and tax credit.)
Copyright 2018 American Civil Liberties Union.
Originally posted by the ACLU at


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