Would Walker Trim Tuition Benefit?

In an interview with Matthew DeFour of the Wisconsin State Journal, Gov. Scott Walker noted he might to open to changes to the private school tuition tax deduction that primarily benefits the well-to-do. He hedged his statement, though, saying he would consider this if legislators crafted such a bill.

The law creating this benefit, as I wrote on Tuesday, was passed quietly in 2013 with no prior study, almost no rationale offered by legislators and no public explanation by Walker, who signed it into law. Dubbed a “neo-voucher” by some, it allows 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.

But a recent analysis by DeFour and the Wisconsin State Journal found that 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 2015. In 2014 the top 13 percent collected 65 percent of the tax handout, the analysis of state Department of Revenue data found. The wealthiest 13 percent of beneficiaries, who made more than $100,000 in income, collected an average benefit of $388 in 2015, while beneficiaries below that income level got an average tax handout of $235.

Because there is no income limit on the benefit, this means even millionaires sending their kids to University School, where the annual tuition runs as high as $26,065, can get a tax deduction for this. Wisconsin, in fact, has created one of the most generous such benefits in the nation.

In his interview with Walker, DeFour asked why the state was spending $8 million to subsidize private schools for rich people, and Walker answered: “We’re not.”

“We don’t distinguish one way or the other based on income,” he said. “But your question makes it sound like we target them. We don’t.”

But given the data showing the benefit mostly goes to well-to-do taxpayers, Walker said “that might be an issue of discussion in the future.” As for whether the state should consider targeting the benefit to lower and middle-class families, Walker said, “that very likely will be what some lawmakers consider.”

Walker added if legislators considered changing to an income targeting approach and “tied that in to then using those dollars to expand the number of low-income families that could then get vouchers, so it’s in the same spirit, that would be interesting to me.”

The only justification ever offered for the tuition tax deduction was given by Senate Majority Leader Scott Fitzgerald (R-Juneau), who argued the tax cut would boost private school enrollment, thereby reducing the “huge tax burden” of educating students in public schools.

But there’s been no effort by the legislature to find out if that is happening. The State Journal noted 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. And if that is the goal, why not target poor and middle-class families discouraged by the price tag for private schools? Why give most of the benefit to wealthier taxpayers who don’t need the tax write-off to pay for private schools?

Democrats have been making hay with this issue, arguing it uses taxpayer dollars that could go to public schools. That may not resonate with Republican legislative leaders with safely gerrymandered districts, but Walker faces a reelection in 2018 and with that in mind crafted a budget that significantly increases funding of public schools. Clearly he is also treading carefully on the issue of this tax benefit.