The Ed Sector’s Sara Mead made a passing comment recently that, “yes, vouchers or tax expenditures in the form of tax credits are public funding.” The problem with this statement is not just that it’s wrong in general, or even that it has repeatedly been found to be wrong with specific regard to education tax credit programs, but that its wrongness has been a matter of court record for long enough that anyone working in education policy can reasonably be expected to be aware of it.I guess he's conceding the point about vouchers, but his counter-argument on tax credits is pretty weak sauce. What's supposed to be the difference, in terms of coercion, between the government garnishing a portion of your income upfront before cutting you a check to pay for school, and the government exempting a portion of your income from garnishment, but only on the condition that you use that exempted income to pay for school? Coulson's just bringing up the narrow issue of legal semantics, but law isn't ethics and I don't see a significant ethical objection to Mead's point.
The most notable relevant case is Kotterman v. Killian, in which opponents of Arizona’s education tax credit program challenged it on the grounds that public money was being used to pay for religious instruction. Writing for the majority, Arizona Supreme Court Chief Justice Thomas A. Zlaket observed that
According to Black’s Law Dictionary, “public money” is “[r]evenue received from federal, state, and local governments from taxes, fees, fines, etc.” …. As respondents note, however, no money ever enters the state’s control as a result of this tax credit. Nothing is deposited in the state treasury or other accounts under the management or possession of governmental agencies or public officials. Thus, under any common understanding of the words, we are not here dealing with “public money.”
Also, let's keep in mind that if education tax credit schemes are going to be universal, they're also going to have to be plainly redistributive. In 1999 - that's just the set of data I found most quickly - income tax filers with AGIs of $20K or less represented 35% of all filers and $16.8 billion in negative income tax liability. Millions of other filers paid less in income taxes than the cost of private school tuition (on average about $4,000 for a parochial school and upwards of $10,000 for a non-sectarian private school in 1999). Providing those people with an income tax "credit" just amounts to giving them extra money, presumably from the government's coffers. So even if Coulson was right about tax credits in general not being "public money", his distinction breaks down when we look at cases where a tax break per se wouldn't actually buy anybody an education. (These are federal tax figures; the situation is obviously different at the state level, but to the extent that the quantities of money changing hands through state or local taxation is less than at the federal level, Coulson's coercion problem becomes greater still. How many people pay enough in state income taxes - or even all state and local taxes combined - to cover the cost of a private school education?)
Update: Sara Mead has more along the same lines here, including the entertaining finding that CATO's former director of fiscal policy studies considers tax credits for companies making ethanol to be "subsidies" and "blatant corporate welfare".