3. Tax Credits

The popularity among parents of tax credits has exploded throughout the country in recent years. K-12 tuition tax credits have passed in states including Arizona, Minnesota, Iowa, and Illinois.

Arizona expanded parental school choice in 1998 to include tax credits for donations to both private scholarship programs and government schools. Former Governor Fife Symington signed into law a bill in April 1997 granting an income tax credit of up to $500 for people who donated to nonprofit groups that distributed private scholarships to needy students.

The law also offers taxpayers a credit of up to $200 for money given to government schools to support extracurricular activities. The Arizona Education Association, Arizona School Boards Association, and the American Federation of Teachers filed lawsuits against the law with the Arizona State Supreme Court. In January 1999, the court upheld the constitutionality of the credit.111

Also in 1997, former Minnesota Governor Arne Carlson fought hard to expand the state's tax credit program. Families with an income of $33,500 and below can now claim a tax credit for any educational purpose (such as tuition, transportation, books, etc.) up to $1,000 per child, but limited to $2,000 per family. The plan also eliminates the state's 40-charter-school cap and mandates that the $350 million in compensatory aid contained in the bill follow students to schools, rather than being spent at the district level. Governor Carlson projected that over 900,000 children would benefit under his plan.112