March 13, 2008

House Bill 1081: Create an Education Tax Credit

Rep. Kevin Lundberg

House Bill 1081 creates a $1,000 property tax credit for families whose children move from a public to a privately funded education system, creates a tax credit for contributions to educational scholarship organizations and sets up a fund that will eventually provide property tax credits for families whose children are already in a privately funded educational system.

It is designed to be a cash positive program for the state. This is because the fund for property tax credits for contributions to educational scholarship organizations and the fund for property tax credits for students already in privately funded educational systems (private schools and home-based educational programs) will get $500 each for every public school student who claims the $1,000 credit for moving to a non-publicly funded system.

Thus, the state general fund will only be liable for $2,000 per year for each student who moves from a public to private system, saving state and local government costs several thousand dollars each year for each student. Since the minimum per pupil cost for public school is over $6,000 per year and capital expenses are several thousand dollars on top of that, the actual cost per pupil for public school systems is closer to $10,000 each year. H.B. 1081 reduces that liability for government funding to $2,000 for each student who moves from a public to a private system.

In addition, H.B. 1081 is a public policy that affirms the positive role privately funded educational systems play in educating students in Colorado.

1/1/2008(House) Introduced, referred to Finance Committee
1/30/2008(House) Hearing in the Finance Committee, postponed indefinitely.

HSLDA’s Position:
HSLDA supports this bill.

Action Requested:
None requested at this time.

Homeschoolers currently pay for the public education system while they privately educate their own children. This “double taxation” is unfair. While almost all homeschoolers would like to be free of the tax burden of public schools they do not use themselves, a significant number of homeschool leaders are concerned about any effort to get benefits from the government. Most homeschool leaders agree that vouchers (direct payments from the government to private or homeschools) are unacceptable because of the controls and loss of freedom that comes with the money.

As an alternative, HSLDA recommends another vehicle: educational tax credits. Parents and individuals who provide for a child’s education should be allowed to keep some of their tax money that would otherwise have been used to fund public education. This goal could be accomplished through a tax credit.

Educational tax credit legislation can typically be divided into two categories: tax credits for individuals or corporations who contribute to a non-profit scholarship fund and tax credits reimbursing parents for educational expenses incurred for their children. Arizona passed an educational tax credit law which falls into the first category while Minnesota and Illinois passed a tax credit falling into the second category.

Education tax credits offer several benefits:

  • Educational tax credits will give parents true choice in education. This tax credit will help reduce the “double tax burden” on parents who choose private or home education.

  • Education tax credits will benefit public schools. By encouraging students to attend private schools or homeschools, the tuition tax credit will reduce overcrowded public school class sizes and the student-to-teacher ratio, making more teachers available to public school students.

  • Education tax credits will benefit low-income families. Most educational tax credit proposals provide a credit for businesses and private individuals who contribute to a nonprofit scholarship fund, which are usually dedicated to helping low-income families. This type of credit provides an incentive to help give low-income families true choice in their children’s education.

For more information on educational tax credits, see our memorandum, “Why Are Educational Tax Credits Important?”

 Other Resources

E-lert—January 25, 2008—Colorado: Calls Needed Now to Help Pass a $1000 Tax Credit for Homeschoolers

E-lert—February 5, 2008—Colorado: $1,000 Tax Credit for Homeschoolers Did Not Pass

Bill Text    (requires Adobe Acrobat Reader)

Bill History