CAN A STATE ALLOW TAXPAYERS to direct their tax dollars to scholarship programs instead of to the state? The U.S. Supreme Court will hear a case that raises that question, having announced last month that it will review a 9th U.S. Circuit Court of Appeals ruling against Arizona's Tuition Tax Credit program.
Arizona grants a $500 tax credit to individuals who donate to charitable organizations providing educational scholarships for students. Since 1998, Arizona's program has raised $56 million, funding nearly 57,000 scholarships statewide. Today, 20,000 Arizona students attend the school of their family's choice with such scholarship funds.
U.S. Rep. Trent Franks (R-Ariz.) authored the scholarship tax-credit program when he was a state legislator in 1997. Opponents of parental choice immediately challenged the program in federal court, but in 1999 the Supreme Court declined to hear that challenge and let the program continue.
Rep. Franks introduced legislation last June that encourages states to replicate the Arizona model. Under the Children's Hope Act, residents of states that establish their own scholarship tax credit of $250 or more would also be eligible to claim an additional federal tax credit of $100 ($200 for joint returns). The credit would go to individuals who contribute to charitable organizations distributing at least half of their scholarships to low-income children.