Wednesday, October 10, 2007

A real tax credit is the way to cure the fake one's ills.

Last week, the Tucson Citizen reported on use of Arizona's tuition tax-credit program to fund K-12 level education at Rainbow Acres, an adult group home. While this use falls outside the intent of the 2002 law, it's in accord with its letter.

We should consider the benefit to retarded adults a positive side effect, not a sign of fraud or a reason to scrap the tuition tax-credit program. One can expect, when a complicated system that adds a layer of institutions--school tuition organizations in this case--to the mix is created, that there will be unintended consequences, positive, negative, or both. If Arizonans want to get serious about reforming education for the state's children, a simpler solution will do.

In what has become the most-viewed post on the Pima County Libertarian Party's weblog, I proposed that Arizona's legislature take steps to remedy the market failure keeping private education beyond the means of too many families: the double-payments problem. Offer a dollar-for-dollar tax credit, with a cap much higher that Iowa's or Illinois's paltry $500, to parents, grandparents, godparents, neighbors, or anyone else who pays the private education expenses of a particular minor child.

This does away with the money-laundering system of tuition organizations, and it's fair: parents should not have to pay both for their children's education and for that of the children of the less responsible or less well-off.

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