No upside to letting credit-spurred donations here flow elsewhere, says Kooyenga
Every current candidate for governor of Wisconsin either favors or at least has not yet rejected the Federal Scholarship Tax Credit, despite Gov. Tony Evers vetoing participation in March, according to the head of a non-partisan business group.
Republican Tom Tiffany favors Wisconsin opting into the credit — not unexpected, as support for its launch last summer in Congress was mostly from Republicans.
But as the Metropolitan Milwaukee Association of Commerce has held a series of candidate town halls, says its head, Dale Kooyenga, “all the Democratic candidates either said that they’re for it or that they’re very open to it.”
As well they should, says Kooyenga.
“This will probably be the largest federal investment in education — indirectly, through donors —in the history of this nation,” he said. “I mean, take your opportunity and run with it.”
Among the Democrats running for governor, a spokesman said state Sen. Kelda Roys hasn’t yet made up her mind, while a campaign spokesman said Milwaukee County Executive David Crowley is “waiting to see the final regulations” while denouncing “a national voucher style program.” Other candidates didn’t respond to email queries by this time this article was published.
So far, 27 states have opted in, meaning taxpayers can earn a large federal tax credit in exchange for donations to schools in those states. Evers’ early refusal and later veto came after critics of school choice attacked the program as a kind of “voucher” because donations could go to organizations helping children at any kind of school. Evers said not excluding private schools from what could be billions of dollars in annual donations would be “catastrophic.”
Among the 27 governors saying yes is Colorado’s, a Democrat, while North Carolina’s governor, also a Democrat, said he will later. The big splash: New York Democrat Kathy Hochul said this month that her state will be in.
Kooyenga sees New York as a turning point: “I think it will be a domino effect of many other Democratic governors opting in.”
“I mean, how do we sit here and watch other states like New York, Colorado, Texas, Alabama, Mississippi have additional money for reading tutors or additional money for marching bands or additional money for robotics” — and refuse any for Wisconsin, he asked.
“It may not be in January. It may not be next year. But in the next couple of years, every state will opt in.”
There are significant unknowns about the program, which doesn’t take effect until 2027. Most involve rules. The section of law authorizing the tax credit was only about four pages, and the rules governing finer details are still being written by the Treasury. A preliminary draft is expected in July.
Among the unknowns: How big the credit will be.
The credit is one-for-one reduction in federal tax liability for every dollar a taxpayer donates to a qualified “scholarship granting organization” — a nonprofit that passes along the money to students in any kind of K-12 school in an opted-in state. The credit can be as big as a taxpayer’s federal liability up to $1,700 — but does that mean $3,400 for a married couple filing jointly? Not clear until the rules are written.
What is clear is that the nature of a tax credit — a taxpayer’s donation is entirely covered by a reduction in her tax bill — is likely to spur a large burst of money into schools in a way determined not by elected officials but by donors’ choices from among nonprofit organizations offering a broad array of assistance.
“It’s an injection of capital into education that’s completely not from the industry,” said Kooyenga — without diverting or reducing a single dollar already earmarked for schools.
It’s not just the amount donors could give, which Congress’ scorekeeper reckoned at $3.7 billion a year — a number that could vary widely depending on how many people take the credit.
It’s who is likely to give, said Kooyenga. With donors made whole by the credit, it enables donations from people without a lot of spare money.
“This is a whole different level of philanthropy, where you can just get thousands of people to send you dollars and create a very healthy donation stream to your school,” he said.
Kooyenga and other observers say that most taxpayers and schools aren’t well aware of the program yet. MMAC, he said, is working with tax accountants’ professional group and with employers to arouse attention. The association is setting up a scholarship granting organization that Kooyenga sees as channeling money from donors without a connection to a particular school toward Wisconsin kids with the greatest needs.
He said he’s talked as well with other nonprofits with different membership networks — some religious-based, some trade unions that could fund programs for high-schoolers interested in trades — about preparing their own SGOs, so they’d be ready once a Wisconsin governor opts in.
And if the governor doesn’t? Taxpayers in Wisconsin still can claim the credit anyhow, so long as they donate to an SGO in a state that has opted in.
Kooyenga said “MMAC will be helpful in coordinating donations to other states in order to start exercising those philanthropy arms of the middle class, which is primarily the funder of this.”
MMAC means it as leverage, said Kooyenga. “We are more than willing to create that political pressure to say, ‘Hey, the business community is sending $2.5 million to New York, and that $2.5 million can be sent to Wisconsin schools if all you do is say yes.’”
As for Evers’ fret about money going to private schools, Kooyenga points out that with about 9 in 10 publicly funded students in Wisconsin attending a district-run public school, it’s reasonable to expect much of the donated money will support such schools.
But that happens only if Wisconsin’s governor opts in — as Kooyenga predicts will happen.
“There’s never been a federal program that’s been as generous as this that the state didn’t opt in,” said Kooyenga.
Patrick McIlheran is executive editor at the Badger Institute.
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