Statement on the Proposed Education Investment Tax Credit/Parental Choice in Education Act

There is little doubt that many parents who choose to educate their children in religious or private schools feel the pinch. I understand this choice and the sacrifice many parents make. It is a choice my parents made when they sent me to Catholic schools. I respect the right of all families to educate their children in the manner that they choose.

My experiences and understanding of this issue, however, doesn’t change the fact that neither A2551 nor the Executive’s recently re-named Parental Choice in Education Act achieve the asserted goals in a way that is fair or Constitutional. To date, no changes have been made to A2551 that will allow me to support it. The executive’s proposal has yet to be put in writing.

What is clear is this: a well-funded marketing effort has obscured the reality of what this bill would do.

When I speak with most of my constituents - even those who attended religious schools - about what the bill would provide and to whom, they do not support it. The marketing campaign asserts, for example, that the EITC would "increase the current tax incentive" to public, private, religious and charter schools," and that it would help "all children regardless of where they attend school."

That makes an excellent soundbite, but it is not how either the bill, or the governor’s proposal would work. Both provide for taxpayer dollars to be taken away from the public school system, while only helping a relatively small number of our State's children. The bill:

  • provides for an unprecedented 75 to 90% reduction in taxes owed - or a tax credit - to education "investors;"
  • underwrites the transfer of tax dollars from private individuals and corporations to sectarian schools and charter schools; and
  • gives up to $1 million tax credit or up to 90% of a contribution.

This would allow investors to avoid their tax liability by receiving an almost dollar-for-dollar tax credit for donations of up to $1 million. Such "donations" are really tax-sheltering investment strategies, accruing as they do to the wealthy investor directly from the public's pocket. Since contributions made by individuals to eligible educational organizations under this new tax credit would be characterized as charitable contributions, they may also be federally tax-deductible; the investor could reap a profit rate of up to 34% on the original contribution.

There is a big difference between a tax deductible charitable donation where one makes a gift of one's own resources, and a tax credit, which redirects an existing tax liability from the state to a religious school entity. Recent mailings and robo-calls misleading people about this proposal demonstrate a desperate attempt to hide how this proposal would really work.

Moreover, the notion that a $450 million package of tax credits over the next two years is needed to fund $200 to public and charter school teachers for school supplies is outrageous. If the state has so much money to give away, let it give all teachers an allowance for school supplies. That I would support.

Despite recent contentions that some priority may be given to $500 tax credits for families with less than $60,000 in income, few such families have the resources to engage the tax advisors necessary to file the necessary papers to apply for the required contribution authorization certificate of approval in advance of making the contribution to an approved entity. Instead, those credits will be gobbled up by education investors, who do have the resources for sophisticated tax advice. A mere handful of corporations or extremely wealthy individuals could easily take the maximum tax credit amount and deplete the entire allowable amount of $150 million allocated for 2015 (with a planned increase in tax credits next year, that amount could soar to $450 million).

The Citizens Budget Commission called the bill “an extremely lucrative benefit likely to serve the state’s wealthiest taxpayer.”

Should this or a similar bill be passed, funding between low and high needs districts is likely to widen even further. Given the huge disparities in income in New York City the bill presents a very likely scenario where a few wealthy individuals or corporations capture the entire program amount and benefit a select few exclusive private schools. After all, the wealthiest 1% of New York State residents receive 35% of all income and have literally seen all the income gains in our state since the Great Recession of 2009-10, while during that same time period, the wages of most New Yorkers have remained virtually stagnant.

Because the EITC would allow wealthy individuals and corporations to target their tax liability and shift tax payer dollars as they choose, and in the process authorize the transfer of public money to religious school organizations, it may well violate the First Amendment's Establishment clause. It also violates New York State's constitutional barring of government's endorsement of religion, and its prohibition on direct or indirect financial aid to religious schools.

Dispassionate analysis makes clear that few low income children would benefit, while uber-wealthy adults would be enriched at their expense.