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Betsy DeVos pitches new tax credit to support school choice programs

Education Secretary Betsy DeVos. (Bill O’Leary/The Washington Post)

Education Secretary Betsy ­DeVos sought Thursday to jump-start her moribund push for school choice, backing a $5 billion federal tax credit for contributions to private-school scholarships.

The proposal would authorize a 100 percent credit for individual and corporate contributions to state-sanctioned scholarship funds, meaning donors could get back their entire donation through their federal taxes. The maximum credit would be set at 10 percent of an individual’s adjusted gross income or 5 percent of a business’s net taxable income.

“The biggest winners will be America’s forgotten children, who will finally have choices previously only available to the rich, the powerful and the well-connected,” DeVos said Thursday.

But the proposal faces a tough road, with opposition from Democrats, who control the House, and even some conservatives, who are wary of an increased federal role in education.

A senior Education Department official, speaking on the condition of anonymity Wednesday to preview the proposal, said the department had been assured there were “multiple avenues” to make up the lost tax revenue but did not name any. Neither of the bills being introduced in Congress include any offsetting tax increases or spending cuts, congressional aides said.

The House version is sponsored by Rep. Bradley Byrne (R-Ala.); in the Senate, the sponsor is Sen. Ted Cruz (R-Tex.).

Cruz’s version would allow total credits of $10 billion a year — $5 billion to support scholarships targeted to adult learners, and $5 billion aimed at children in K-12 schools.

A similar federal tax credit was pushed in the first year of the Trump administration as part of the broader tax overhaul. But the overall thrust of the tax overhaul was simplifying the tax code, and the education tax credit would do the opposite. And some conservatives complained then that a federal program could lead to increased federal control over private-school scholarship programs.

Cruz tried to preempt that argument Thursday, saying his legislation would include “ironclad protections” preventing federal control over local education decisions.

But the latest version of the tax credit faces the same head winds as the earlier proposal.

“It’s wonderful that the administration wants to advance school choice, but a nationwide federal tax-credit scholarship program is the wrong way to do it,” said a statement from Lindsey Burke and Adam Michel of the Heritage Foundation, an influential conservative think tank. “This could open the door for further education regulations down the road that neutralize the advantages of private education.”

Many liberals regard the idea as a backdoor voucher and say available tax dollars should be used to support public schools. Even as Cruz predicted bipartisan support for the plan, Sen. Patty Murray (D-Wash.), the top Democrat on the Senate Education Committee, emailed a statement declaring the idea “dead on arrival.”

“Secretary DeVos keeps pushing her anti-public school agenda despite a clear lack of support from parents, students, teachers, and even within her own party,” Murray said. “Congress has repeatedly rejected her privatization efforts and she should expect nothing less here. This proposal is dead on arrival and I’m going to keep fighting for what people actually want — improving the public schools in neighborhoods around the country that serve the vast majority of our students.”

Still, backers saw the new proposal as a potential breakthrough.

“This may very well be the first federal education choice proposal to make it through Congress,” said Jeanne Allen, chief executive of the Center for Education Reform, which backs school choice programs. She said the Senate bill’s inclusion of popular apprenticeships and workforce development initiatives is likely to boost its appeal.

The White House excluded the education tax credit from its tax blueprint for Congress in 2017, but President Trump is expected to include it in his budget plan for next year, department officials said.

The tax credits are meant to advance school choice without directly sending tax dollars to private schools. Already, more than a dozen states give residents tax breaks for making private donations to nonprofit scholarship programs.

The education of Betsy DeVos: Why her school choice agenda has not advanced

The existing scholarship programs differ by state but generally give money to parents for expenses such as private-school tuition, books, computers, tutors and transportation.

The federal program would mirror existing state efforts by giving a federal tax break for similar contributions. Each state could decide whether to create such a program and, if they do, what it would cover. Americans would be able to donate money to programs in any state, not just their home state.

The senior Education Department official said taxpayers could not get both state and federal tax credits for the same donations.

DeVos has promoted school choice — an idea that includes private-school vouchers, home schooling and public charter schools — for many years. As education secretary, she has traveled the country to promote her views but has had little success winning support for new federal initiatives, even when Republicans controlled both houses of Congress.