Small: Education tax credit debate marred by lousy logic

Tax credit debate marred by lousy logic

By Jonathan Small

The state House of Representatives recently advanced a tax credit of $5,000 per child for private-school tuition. That has generated healthy debate on increasing educational opportunity in Oklahoma, although not all arguments put forth are valid.

One particularly egregious argument aired by opponents is that the education tax credit is somehow a wasteful giveaway. Ironically, some entities that tout the importance of “investing in education” now object to a tax credit that would … well, invest in education.

The $5,000 per-child education credit would be substantially less than the $12,967 spent per pupil in the public school system, yet it could open doors for many children to obtain a better education. Spending less for better outcomes is a feature, not a bug.

Furthermore, it’s not as if parents are tax slackers. Per-capita tax payments in Oklahoma amount to $17,282 for a family of four. Providing families a $5,000 per child education tax credit is not a “giveaway.” Those families will still pay thousands in taxes, but at least their tax money will be spent on far more defensible priorities than through some existing tax-credit programs.

Oklahoma provides 39 income tax credits. Not all are created equal.

The film rebate program had its cap raised from $4 million to $30 million in 2021, and legislation filed this year would further raise the cap to $80 million. Yet not one independent analysis shows the economic activity associated with film productions generates enough revenue to offset the state cost of the film tax-credit program.

Oklahoma has also paid out $88 million per year in zero-emission facilities tax credits – basically, a subsidy for wind farms.

The state has paid out nearly $13 million per year to lure aerospace jobs to Oklahoma. The child-care tax credit totals $43 million per year. The earned income tax credit, given to lower-income individuals, totals $16.1 million. There’s a new jobs credit that totals $47 million.

Then there’s the Quality Jobs Act, which provides quarterly cash payments equivalent to up to 5 percent of new payrolls at a business for up to 10 years. While it’s not technically a tax credit, the bottom-line result is the same. It cost $57 million last year.

Ask yourself, are any of these programs more important than improving educational outcomes? Would we need incentives to lure aerospace engineers to Oklahoma if our education system produced them in-state? Is it better to have a TV show shoot for three months in Tulsa, or to have an education system producing a new generation of entrepreneurs whose businesses employ people year-round?

If our workforce was better prepared, educationally, the need for business incentives to lure companies to Oklahoma would likely fall across the board.

Healthy debate on the education tax credit is commendable. But for that debate to be healthy, it must also be rational.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.