(These clarifications are in response to the many comments I received after my last article on this topic, which appeared in The Jewish Link on 11/23/2017.)
Day school tuition is increasing at a faster rate than income growth. Young families without wealthy parents are facing mounting financial difficulties leading to difficult choices such as limiting family size or considering public school. Over 40 percent of day school parents receive financial assistance and this largesse is not limitless. Is there help for parents to afford a day school education? The answer is yes, but we have to be willing to do the hishtadlus to make it happen.
In 1997 a law was passed that allowed Arizonans to get a dollar-for-dollar credit on what they owe the state in income taxes for money they donate to organizations that provide the scholarships for private and parochial schools. Individuals have been able to divert up to $500 a year, or double that for couples. This law now exists in over a dozen states.
Under the original Arizona tuition tax credit statute, individuals who contribute up to $500 to Student Tuition Organizations (STOs) get to take a credit for the amount of the contribution on their state tax return. The STOs in turn award scholarships to students to defray the cost of attending private schools. To qualify for the program, STOs must be tax exempt entities that distribute at least 90 percent of their revenue in scholarships. STOs must offer scholarships to at least two different private schools. In some states the amount is higher—up to $1,000 for an individual, $2,500 per married couple and many thousands of dollars for businesses. Taxpayers can select which school gets the money but not which student. It’s basically a law that lets individuals and corporations divert income taxes they owe to instead help students attend private and parochial schools.
Opponents of the tax credit program allege the program is unconstitutional because some schools that receive the money are religious institutions. Others claim that the money for the scholarships could be going to public schools, which are responsible for educating millions of students and have endured years of budget cuts.
The tax credit program has been challenged in a variety of courts. One of the interesting question raised was—is a tax credit the same as a tax deduction? Another question raised was whether a tax credit is the same as public money. One ruling was that it’s not, “unless your theory is that the government owns all of my money to start with and only gives me the benefit of not paying taxes through deductions or credits.” Another argument was that tax credits are like another tax write-off with a long history and no prohibition on benefits to religious institutions. There’s very little distinction between a tax credit and a deduction for a donation.
When the government spends funds from the treasury, dissenting taxpayers know that they have been made to contribute to an establishment in violation of conscience. In contrast, a tax credit allows dissenting taxpayers to use their own funds in accordance with their own consciences.
Ultimately the legality of tuition tax credits was upheld by the United States Supreme Court in 2011. Respondents alleged that cutting a person’s taxes is equivalent to spending government money—and since taxpayers are receiving credits for donations to religious organizations, that was ostensibly equivalent to the government giving to those organizations. The Court answered, quite simply: “That is incorrect.” Elaborating, the Court ruled that: “Tax credits and governmental expenditures do not both implicate individual taxpayers in sectarian activities.” Respondents’ contrary position—that citizens benefiting from the tax credit in effect are paying their state income tax to STOs—assumes that all income is government property, even if it has not come into the tax collector’s hands. “That premise finds no basis in standing jurisprudence.” Justice Kennedy delivered the opinion of the Court, in which Justices Roberts, Scalia, Thomas and Alito joined. Justice Scalia filed a concurring opinion, in which Justice Thomas, joined. Justice Kagan filed a dissenting opinion, in which Justices Ginsburg, Breyer and Sotomayor joined. [October Term, 2010. Supreme Court of the United States Arizona Christian School Tuition Organization v. Winn et al. Certiorari to the United States Court Of Appeals for the Ninth Circuit No. 09—987. Argued November 3, 2010—Decided April 4, 2011]
Private choice is the defining characteristic of the tuition tax credit program. The government stays completely neutral and allows donors to freely decide which scholarship organization to donate to and parents to choose the school that will best meet their children’s individual needs. Opponents of the plan have argued that money diverted from the state treasury means less cash for public schools, which are obligated to educate all children. However, the amount of money lost in tax revenues is far less than if the state had to educate all these children.
If community groups in Bergen, Passaic, Essex, Union, Middlesex and Ocean counties would band together and work with the Archdioceses, this could become the law in New Jersey and pump millions of dollars into the day school coffers so that tuition could be capped at a reasonable level. If the OU, Agudas Yisrael, RCBC, UJA and other groups choose to join this effort, tavo aleyhem bracha, but if parents want something badly enough they must do it themselves.
Organize, meet with legislators locally and in Trenton, bring busloads of parents to committee hearings, start the process.
By Wallace Greene
Rabbi Dr. Wallace Greene is a day school consultant and advocate.
