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A version of The Educational Choice for Children Act (ECCA) that passed through the House budget reconciliation bill would create a federal private school voucher program. This proposal is alarming – it prioritizes wealthy donors over the 90% of students attending public schools. Private school vouchers are harmful for public schools, particularly those in rural areas, discriminate freely against students, and have not been shown to improve academic outcomes.
The bill itself is costly: it will spend $5 billion a year in taxpayer funds, totaling at least $20 billion over a four-year period. However, the loss of revenue will be higher when considering the federal and state losses of capital gains tax. While legislators claim the bill aims to help kids, it primarily serves as a tax write-off for the wealthy.
The provision includes a capital gains tax shelter that would allow wealthy individuals to donate their appreciated corporate stocks and avoid paying capital gains tax on the appreciation, while also receiving a federal tax credit for the full market value of the donation. According to the Institute on Taxation and Economic Policy (ITEP), this provision could lead to a “120 percent match or more for upper-income families” and disproportionately benefit wealthy Americans, while decreasing funding in state and federal budgets. For example, ITEP calculated that if ECCA had been in effect a few years ago, voucher proponents such as billionaire businessman Jeffrey Yass could have made a personal profit of $13.3 million annually from capital gains tax avoidance.
The provision would make eligible all students whose families make no more than 300%of the median gross income. That income level would make 85-90% of students eligible in every state. According to the Brookings Institution, under this provision the “wealthiest” families in the poorest parts of the country are ineligible, while the almost-wealthiest families in the wealthiest parts of the country are eligible. As a result, a rural family would be much less likely to qualify for a voucher. Private school voucher programs already disproportionately harm schools in rural districts, which often have no private options. This proposal would hurt rural public schools while ensuring that families interested in private options will face increased difficulty receiving a voucher.
While school voucher policies may sound appealing, they prioritize rich donors at the expense of kids and schools. Instead of giving tax breaks to the rich, lawmakers must invest in the nation’s children and improve our public schools.
Events & Resources for Action
Public Funds Public Schools has a tool that estimates the public price tag of universal voucher programs in every state.
The Institute on Taxation and Economic Policy offers a new resource emphasizing how the “House Tax Bill Enlists the Wealthy to Spread Private School Vouchers.”