The Tax Handout for Rich Kids
State's “neo-vouchers” reimburse wealthy for kids at elite private schools.
The annual tuition for University School of Milwaukee is $18,835 for first grade and rises to $26,065 for twelve grade. That’s unaffordable, of course, for most people. The school is meant to be an elite, private institution that serves a very select clientele — mostly the children of wealthy CEOs, doctors, lawyers and the like. Wealthy families choose to pay such tuition because they feel it’s worth it for such a specialized institution.
But beginning with the 2014 tax year, that suddenly changed, and average taxpayers began to subsidize this separation of wealthy students from the common schools that serve most of us. A law supported by Republican legislators and Gov. Scott Walker gives families sending their children to private schools the ability to recoup some of that spending through a tax deduction of up to $10,000 annually for high school tuition and $4,000 per year for elementary school tuition.
It’s one of the most generous such subsidies ever passed by a state, and most of the money goes to the well-to-do. A recent analysis by the Wisconsin State Journal found the wealthiest 13 percent of taxpayers in the state collected almost $8 million — or 66 percent — of the $12 million in tax deductions awarded.
In 2014, the article reported, the top 13 percent of taxpayers collected 65 percent of the tax handout for parents of private school students.
These kind of tax breaks have been called neo-vouchers by the liberal Institute on Taxation and Economic Policy. Rather than awarding money directly to families, as with a traditional voucher, the money comes through a tax credit or deduction, something particularly suitable for well-to-do taxpayers. The direct payment of vouchers makes more sense for low income families who were originally targeted, as they wouldn’t be able to pay the tuition upfront and wait for a tax credit.
Back when Wisconsin legislators were considering passing this law, Adam Emerson of the Fordham Institute told Governing magazine its passage would be a “significant development” for the school choice movement.
“It’s been highly controversial to do this, so most states just haven’t gone there,” he noted. “They tend to favor programs that tend to benefit low-income families. I think once people get in between the lines and realize what this is, you’re going to see a lot of opposition.”
Ah, but Wisconsin quietly passed this program as a budget add-on (added by then state Sen. Glenn Grothman), with no study and little discussion, which has become a common pattern under Walker and the Republicans. And Walker, Senate Majority Leader Scott Fitzgerald (R-Juneau) and Assembly Speaker Robin Vos, (R-Rochester) all declined to comment in response to the State Journal’s story, also pretty common for the state’s leaders.
Back in 2013 Fitzgerald claimed the tax cut would boost private school enrollment, thereby reducing the “huge tax burden” of educating students in public schools. But if that was the goal, why not target poor and middle-class families discouraged by the price tag for private schools. Why include the well-to-do taxpayers who have become the main beneficiaries and don’t need the tax write-off to pay for private schools?
The State Journal notes that in the 2014-15 school year, private school enrollment increased for the first time after six straight years of decline, from 119,801 to 123,104, or about 3,300 students, but that enrollment stayed about the same in the 2015-16 school year. Whether the tax handout helped cause that one-year blip in private school enrollment is impossible to say. Certainly Fitzgerald didn’t seem eager to discuss the issue.
State Superintendent of Schools Tony Evers assailed the legislation when it was first proposed, calling it “welfare for the rich.”
“It’s taking money out of the system that would normally go to public schools,” he told the Milwaukee Journal Sentinel. “If you and I were billionaires and were sending our kids to high-tuition high schools, we would… get the tax credits for that. It’s obviously not progressive and it’s going to hurt our public schools.”
Democrats have charged the private school tax break is just one more example of Republicans supporting tax cuts that benefit the wealthy and reduce available dollars for public education. They also point to the ballooning Manufacturing & Agriculture tax credit, almost all of which has gone to the wealthy.
“All of this is tax money that could be going to our public schools,” Senate Minority Leader Jennifer Shilling (D-La Crosse) told the State Journal.
Has this tax handout resulted in any savings in education costs to offset the loss of taxes? Why give the tax break to the wealthy? Should taxpayers subsidize schools that choose to teach crackpot theories like creationism rather than the science of evolution? These and other questions aren’t getting discussed because Republicans won’t talk about it, and the media has offered little coverage of the issue.
The Milwaukee Journal Sentinel’s contribution to this discussion has been… peculiar. The newspaper eagerly gave us its Politifact conclusion chastising Evers’ contention that the private school tuition tax break was “the most generous in the nation” as only “half-true.” But its own analysis, when you read the details, shows that no state in the country then offered a more generous tax break.
And so Evers, the only one to explain his stance on the legislation, is criticized — wrongly — for his alleged inaccuracy, while the failure of Walker and other Republicans to offer any explanation for their support is ignored. I’m guessing that made it much easier to pass this handout for the wealthy.
If you think stories like this are important, become a member of Urban Milwaukee and help support real independent journalism. Plus you get some cool added benefits, all detailed here.