Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment
Approximately 10 percent of school-age children in the United States are enrolled in private schools, relieving the financial burden on public school systems, and the taxpayers who support them, of the cost of their education. At present, the tax code does not allow families who provide this financial relief an income tax deduction, even though such relief is a gift to governments for exclusively public purposes and thus analogous to a charitable donation. Using the Public Use Microdata Sample of the American Community Survey and the NBER Internet Taxsim calculator, this paper estimates that granting families who enroll their children in private schools an income tax deduction equal to the per-pupil expenditures in their public school district would cost the federal government an average of $7.75 billion per year over the 2006 - 2010 period. This amount is less than one percent of federal income tax revenues. Because private school enrollment, public school expenditures, the likelihood of itemization, and marginal tax rates increase with taxpayer income, the dollar benefits of this change are positively related to income. At the margin, high-income taxpayers would receive about 35 cents in federal and state tax relief for each dollar of per-pupil expenditures foregone.
This paper was prepared for the NBER Tax Policy and the Economy conference held in Washington on September 20, 2012. I would like to thank Don Casler for research assistance, Dan Feenberg for advice and assistance with the NBER Internet Taxsim program, and Will Bishop, Jeff Brown, Liz Cascio, Dennis Epple, David Figlio, John Hart, Sally Kwak, Ron Shaiko, and Eric Zitzewitz for helpful discussions. Any errors are my own. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Andrew A. Samwick, 2013. "Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment," Tax Policy and the Economy, University of Chicago Press, vol. 27(1), pages 125 - 160.
Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment, Andrew A. Samwick. in Tax Policy and the Economy, Volume 27, Brown. 2013