Misplaying the Angles: A Closer Look at the Illinois Tuition Tax Credit Law

An Overview

The Illinois Legislature enacted its tuition tax credit law in 1999. While tuition tax credit laws in other states provide tax credits to businesses and/or individuals that contribute to tuition “scholarship” programs, the Illinois law offers tax credits to taxpayers whose own children are attending school. Yet, in enacting this law, Illinois was not breaking new ground.

Indeed, tuition tax credits are not new. Since 1972, in fact, there have been 12 attempts to secure voter approval of tuition tax credit or school voucher referenda that would enable public tax dollars to subsidize private and parochial education. Voters have defeated every one of these referenda—usually by overwhelming margins.1

Recently, tuition tax credits have gained new interest and attention, as some proponents have suggested that tuition tax credits are a viable alternative to more controversial voucher programs.2 Other supporters view tax credits as a complement to vouchers. Florida Gov. Jeb Bush has successfully pushed for the enactment of both voucher and tax credit programs. The president of the pro-voucher Children First America recently saluted the work of the Arizona legislator who sponsored the state’s tuition tax credit law.3

Tuition tax credit advocates have responded to defeats at the polls by focusing their efforts on state legislatures. As their model, many proponents have cited the Arizona tuition tax credit law, which allows taxpayers to receive credits for contributing to private voucher funds for other parents’ children.4 Lisa Graham Keegan, who was the state’s superintendent of public instruction at the time, hailed the 1997 law for being “responsive to the needs of disadvantaged students and their families.”5

Within the past year, however, two analyses have found that the Arizona law disproportionately benefits wealthier families, including many parents whose children were already enrolled in private schools.6 According to The Arizona Republic, when confronted with these findings, a spokesperson for the pro-tax credit Goldwater Institute said that helping poor kids really wasn’t the purpose of the tuition tax credit law; it was just a way to get the law passed. Goldwater’s Darcy Olsen was unusually candid. “Has it only helped [poor families] more than moderate and wealthy families? Probably not,” she told the newspaper. “If it was sold that way, it’s only an angle.”7

Arizona is not the only state in which tuition tax credit supporters have used this “angle” to help garner support for this approach. This is also how supporters pitched the 2001 Pennsylvania law that offers tax credits to businesses contributing to private-school tuition funds.8 Just last month, however, an analysis of the Pennsylvania law concluded that middle- and upper-income families are receiving the lion’s share of tax-credit dollars through private-school tuition assistance.9

In spite of differences in how Illinois’ tuition tax credit law is structured, recently available state data indicates that the Illinois tax-credit program is having a very similar impact.10 A closer examination of the Illinois tuition tax credit law reveals why this is so.

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