State Capitol News
2:31 pm
Wed March 9, 2011

Senate Votes to Let Taxpayers to Continue to Earn Tax Credits by Donating to Scholarships for Private and Parochial Schools

Phoenix, AZ – A 1997 state law provides a dollar-for-dollar income tax credit
for money individuals donate to organizations that provide
scholarships for students to attend these schools. The current
cap is $500 for singles and twice that for couples. The
legislation approved Tuesday bumps that up so that people will be
able to give up to $750 -- $1,500 for couples -- and get that
back on their state income taxes. The most recent figures show
Arizonans reduced their tax payments by more than $50 million
with the credits. But Sen. Rick Murphy said there really is no
loss to the state.

(The average scholarship is only, like what, $1,800, $1,900. And
the average amount of money every child is receiving from state
aid is $5,000. So you've got that incremental $3,000 difference
per child for every child that switches over.

Murphy acknowledged that some kids getting the scholarships
probably are from families whose parents would send them to
private or parochial schools anyway. But he said even if only
half the recipients leave public schools it still saves money.
Sen. David Schapira said the diverted funds and the dollar-for-
dollar credits are only part of the problem. He pointed out that
donors can recommend which child should benefit, though the
scholarship organizations are free to ignore that.

(You essentially write that kid and their parent a check and then
get a dollar-for-dollar tax credit for it. To me that's not
really the idea of non-profit charitable organization. Because
it's really not charity. If you have a kid whose friend wants
some money and you write them a check and get the money back,
that's not a charity. That's a loan.)

Schapira attempted to tack on a provision limiting the
scholarships to people below a certain income level, one that
computes out to about $62,700 a year for a family of three.
Murphy objected.

(This is an income level. This is not a financial need
qualification. Those are not always the same thing. You could
have somebody that is above that level who has some dire
financial circumstances, health issues, etc. in their family that
still would have a financial need.)

In the end senators approved expanding the credits, with no
restriction on who qualifies for the scholarships. For Arizona
Public Radio this is Howard Fischer.