Republicans called their new federal tax credit for school choice a generational win. It is a $1,700-per-donor subsidy to households with federal tax liability, routed through state-approved scholarship organizations that overwhelmingly fund private and religious schools. The program is being sold as a windfall for poor kids. The reality is a tax shelter that can drain public money from the public schoolhouse.
Assuming 10% participation by eligible donors, scholarship funds could reach $18.8 billion a year, a new report says — roughly 24% of federal K-12 spending. That is “more than the federal tax benefits each year for charitable giving to every school, college, and university combined.” The number is technically neat and politically preposterous. It is dressed up as educational opportunity while remaining a fraction of what chronically underfunded public districts actually need.
The program, passed in the One Big Beautiful Bill, will soon give federal taxpayers a credit of up to $1,700 if they donate to state-approved scholarship groups. The credit is nonrefundable, meaning it is worthless to a working family with no federal tax liability — precisely the families the program claims to serve.
Patrick Graff, a senior fellow at the American Federation for Children, used IRS data to calculate the program’s potential reach. The Federation is the lobbying arm of the school-choice industry, so its calculation should be read as a sales projection, not as neutral analysis. Mr. Graff’s math is useful mainly because it shows how large the giveaway could become.
Roughly 100 million taxpayers could claim the full $1,700, while another 21 million could receive a partial sum. If every one of them donated the full amount of their credit eligibility, the program would yield $187.9 billion a year for scholarships. If the Treasury Department’s forthcoming rules let married couples combine for a total $3,400 credit, Mr. Graff estimates another $75 billion could be donated.
Two hundred and sixty-two billion dollars a year.
Drawn out of public revenue and into private hands before a single child has been taught anything.
No serious observer believes that ceiling will materialize. That is not the point. The point is the direction of the money, the beneficiaries of the credit, and the public institutions left to compete for whatever remains.
Word will get out about the credit, the program’s boosters assure us, once the marketing overcomes the obvious problem that the people who need help most cannot use it. The teachers unions, school boards and parents’ groups that the boosters dismiss as “running interference” are more accurately defending the public school system that most American children actually attend.
A mere 5% participation rate would produce $9.4 billion. At 10%, it would produce $18.8 billion. States with similar scholarship tax-credit programs report donor participation of about 1% to 3% of taxpayers, Mr. Graff says, but there is “good reason” to think the federal figure will be higher. State programs often have overall funding caps that restrict donors. The federal credit does not.
The only limit is the willingness of wealthy donors to underwrite the dismantling of the public system.
Nineteen mostly Democratic states, plus Washington, D.C., have declined to opt in. Mr. Graff estimates that their taxpayers carry roughly $83 billion in scholarship-giving capacity. He presents that figure as lost opportunity. It is more honestly read as $83 billion in tax-favored donations that did not siphon money away from already-underfunded public districts.
Because donors in states that opt out can still give to qualified recipients in states that opt in, the money will flow across borders anyway. Opt out, and your state’s taxpayers can still subsidize private schools elsewhere. The arrangement answers the question of whether the program is about helping poor children or subsidizing private-school tuition for whoever can claim the credit.
It is the latter.
How will Pennsylvania Gov. Josh Shapiro explain that he refused $747 million? He will not have to explain refusing a real appropriation, because the figure presumes 10% donor participation that nobody has produced evidence for. The same goes for California’s $2.25 billion, Illinois’s $743 million and Michigan’s $549 million.
From the public schools’ view, declining those sums protects communities from a fiscal raid. Colorado Gov. Jared Polis called the credit “free money” when he opted in. That is the kind of line a governor uses when he is not yet responsible for the program delivering on its promises. Polis’s choice is the cautionary tale: a Democrat took the credit at face value and helped hand private-school operators a check at public schools’ expense.
A recent Gallup poll found that just 32% of U.S. adults are satisfied with K-12 education, a new low. The answer is not to punish the public schoolhouse for the public’s dissatisfaction with it. The answer is to fund public schools to the level their students need: more teachers, smaller classes and modernized buildings.
The marketed “shake-up” is not a shake-up. It is redistribution upward, wrapped in a slogan about parents and choice. It takes a public obligation, routes it through private institutions and calls the resulting transfer freedom.
The 19 states that declined to participate saw it for what it is.
