A defense of tuition tax credits -- for the poor

By , John C. Esty Jr. is president of the National Association of Independent Schools.

To contribute to the current debate over the financing of education, the public needs to have a better understanding of the distinction between vouchers and tax credits. The former constitute a radical way of redirecting public funds from schools to the users - parents and students - who would then be free to choose among school alternatives and pay for the choice with a state-issued ''ticket.'' Tax credits, on the other hand, are a way of providing some relief to taxpayers who have private tuition expenses, much as a federal tax law provides relief to those who have child-care expenses or install energy-saving devices in their homes.

The distinction is important because they have different advocates and different beneficiaries, and each has curious bedfellows. Vouchers typically appeal to the theoreticians who think parental choice and market competition will improve all of education; they also appeal to those who feel public education needs a threatening jolt to get it to function better, and to those who feel public policy should equalize the resources available for each student, so that inner-city children benefit from the same per-student expense as those in the wealthy suburbs.

For better or worse, the voucher advocates do not seem to be large in number or have much political clout, as the failure of the California Family Choice Initiative indicates.

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Tax credits, on the other hand, appeal mostly to those who think it unfair for lower- and middle-income families - desperately looking for better education for their children and too poor to move to affluent suburban public schools - to devote all their resources to private education or to be denied that choice for economic reasons. The push for tax credits is overwhelmingly from the Roman Catholic educational establishment, which educates two-thirds of America's private school children (3.3 million), including a disproportionately high number of central city children. (In the 10 largest American cities between a third and a half of all school children are in private schools, mostly Roman Catholic ones.)

The non-Roman Catholic religious schools that are not part of the fundamentalist-Protestant group (which amounts to no more than 10-12 percent of private school enrollment) are the next largest bloc pushing for tuition tax credits. They, too, are part of what is a middle- and lower-income, tax-relief, choice-equalizing phenomenon. There is virtually no advocacy or pressure for tax credits from the elite or wealthy sector of private education and not too much from the fundamentalist-Protestant group, who are always uneasy about any form of government involvement, even in so indirect a way as tax relief.

The purpose of tuition tax credits - at least in the minds of their most mumerous and politically strong advocates - is not, therefore, to get families to switch their children from public to private schools or to revolutionize the structure and financing of American education. The purpose is to use public policy to bring some financial relief to those who have already made the decision to enroll their children in private schools for educational reasons - usually discouragement over public school expectations, standards, and discipline. That group includes a great many minority families, who probably comprise the fastest-growing segment of private education, with the exception of the comparatively small fundamentalist Protestant segment.

The main beneficiaries of this kind of relief are intended to be the 27 percent of all private school families who have annual incomes of under $16,000 or perhaps the 50 percent who make under $24,000 a year. The average private tuition cost for the first group is around $600 and for the second $900, so relatively modest levels of tax relief make quite a difference. Farther up the income scale, as the average tuition cost increases, the tax relief proposed in current bills becomes less critical to family decisions and is less justifiable as public policy. Farther down the income scale there is a point where no taxes are paid, so it can be argued that for full equity and equality of choice, these private school families should receive educational ''grants.''

In other words, tuition tax credit legislation that has a ''refundable'' feature for nontaxpaying families, and a family income cutoff for those who don't need relief, makes a much more defensible public policy even if not a politically popular one. A tax credit bill with these features might also inhibit the temptation of a private school simply to raise tuitions in tandem with its patrons' tax relief, if that relief were available only to some.

In addition, a fair tax credit bill would also exclude higher education, which has access to other forms of government and private aid and which is almost monolithically opposed to tax credits. The result would be an act costing the government something like $2 billion a year - not a bad investment, especially if it results in some equity of family choice and bails out a system that saves taxpayers over $10 billion a year.

The greatest irony in the whole business is that what makes some sort of public aid to private schools more popular now may not be the spirit of Reaganomics, but the increasing number of lower-income and minority families who are worried about their children's education in public schools.

Perhaps the greater focus of public and legislative attention should be on how the $110 billion spent on public schools can be directed more effectively than on whether $2 billion can be justified for those who need effective education the most. That is really the key issue, rather than whether tuition tax credits should benefit the well-to-do, which clearly they should not.

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