The Education Tax Credit Endgame

Andrew Coulson tries again to convince us that education tax credit's aren't the same thing as public funding, and fails because he ignores my key points: Education Tax Credits have the same impact on individual and government budgets as would government expenditures for the same purpose, and unlike broad tax cuts, the linkage of tax credits to specific behaviors has a distorting impact on individual incentives. But at this point I'd imagine we're talking past each other, because we have fundamentally different perspectives on taxation.

There's a broader point worth making here, and it involves the seeming contradiction between Cato-types' recent preference for education tax credits and their more general stance on tax issues. Libertarians have traditionally argued that tax systems should be both simple (count the number of posts on their blog extolling the flat tax) and behavior-neutral, to avoid ingintroducing incentives that distort behavior and markets. Education Tax Credits violate both of those principles.

But what's particularly interesting is how education tax credits interact with the much more important libertarian contention that tax rates and tax revenues should be low. As tax rates are lowered, the value of non-refundable tax credits (and thus the amount of support education tax credits would generate for scholarships, or the amount of tuition they offset for parents) declines. Were both Coulson and his colleagues in Cato's tax policy shop to succeed, the ultimate result would be to virtually eliminate any public role in encouraging support for education. This is an important point: The ultimate aim of Coulson's views is not simply to destroy "public education" but to eliminate any social commitment to supporting children's education, leaving responsibility to fund children's schooling entirely in the hands of their parents and, for children with the bad judgement to be born to poor parents, the vagaries of individual charity.

Obviously, this is a view that is very far out of the mainstream not just of American culture but also of the school choice movement (of which I consider myself a part). So it's no wonder Cato's education policy team would prefer to talk about the benefits of choice for poor parents and for reducing social conflict. (To his credit, Coulson has written that he believes parent responsibility to pay for education is a core principle of his ideal education system.) But it's entirely disingenuous of them to present tax credits as a "third way" on school choice--they're actually a much more radical alternative, leading ultimately to an utter abdication of any social or communal responsibility or committment to children.