Sen. Kirt: Tax credits are a reverse Robin Hood, robbing public schools of needed resources
Private school voucher proposals have moved through both the House and Senate over the last few weeks. Now we cannot be sure what final deal may come out of negotiations and whether it will stall or move forward to the governor’s desk.
In these proposals, Oklahomans are awarded large tax credits to pay for private school tuition. Those funds come from all of us, but then individual families decide where our money is spent. Supporters claim the programs could help low-income students afford private education, but recently released data shows differently.
The Institute on Taxation and Economic Policy (ITEP) recently released a report confirming critical concerns about private school vouchers — they are just a tactic for wealthy Oklahomans not to pay their fair share of taxes. We know voucher programs defund public education and erode the foundation of our communities. Now we also have verified that most households that use vouchers to avoid taxes are high-income business owners or very wealthy people. ITEP’s recent report confirmed that in other states implementing similar voucher regimes the majority of users have household incomes over $200,000. In Arizona, 60% of users had incomes over $200,000, and in Louisiana, over 99% of users made over $200,000.
The report also showcased advertising by Oklahoma’s tax credit programs as a key example of how such credits make tax shelters for the wealthy. These ads specifically highlight how wealthy households can leverage tax credits to make a profit. IRS guidance on donation of stocks to funds for private school scholarships is murky, allowing taxpayers to avoid paying the capital gains tax they owe. Combining that tax avoidance with the credit leads to extra money in their pocket.
A recent Oklahoma Watch article pointed out that Oklahoma is one of only a few states that allows donations of corporate stocks or securities. The Institute on Taxation and Business Policy said this type of tax shelter allows wealthy families to offload stock and get paid all or most of its value with state tax credits.
To add insult to injury, this year’s proposed voucher scheme has few accountability measures and can be stacked on top of existing tax credits. And the amount that wealthy people can claim through these credits has consistently been going up. In 2021 the Legislature raised the existing tax credit cap on one program from $5 million to $50 million while another topped $11 million in credits last year. Now these credits specifically incentivize attending private institutions.
This compounding series of misleading incentives destabilizes public education for the 90% of Oklahoma families who choose our public schools. As state leaders have increased Oklahoma’s private school voucher programs, needed state services get put on hold or reduced. The disheartening truth is that wealthy households gain almost all the benefits, leaving most Oklahoma families further alienated from the educational opportunities they deserve.
This scheme is a reverse Robin Hood, robbing our public schools of needed resources to subsidize the wealthy. It is unacceptable to continue siphoning our collective tax dollars into schemes that defund public education. We can’t afford to subsidize the wealthy at the expense of an entire generation of Oklahomans. We should reject all private school tax credit proposals in the Legislature now.
Sen. Julia Kirt, a Democrat, represents District 30, which includes Oklahoma City, Bethany and Warr Acres. She serves on the Appropriations, Finance and Legislative Office of Fiscal Transparency Committees and co-chairs the Legislative Mental Health Caucus.
This article originally appeared on Oklahoman: Sen. Kirt: Vouchers as tax avoidance destabilizes public education
