Arizona Schools See Increases in Tax Credit Donations

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March 6, 2011; Source: The Arizona Republic | In 2010, tax credit donations to public schools in Arizona rose to $42.3 million. When the final tabulation is complete, perhaps with another $1 million credited to the program, the increase will be between 1.5 percent and 2 percent over donations in the previous year. Charter schools received a 12 percent increase over the previous year. This article from The Arizona Republic attributes increases in the program in part to improved marketing techniques, among other strategies.

In Arizona, a single tax payer can get a tax credit of $200 and a married couple $400 for a donation to public schools. A tax credit is different than a charitable deduction. A charitable deduction reduces a taxpayer's taxable income; a tax credit is a dollar-for-dollar credit against income taxes owed.

When schools are funded by public appropriations, the decision is made in the public arena. When funding is dependent on tax credit donations, the decisions are made by individual donors in the private sphere, rather than in the "commons."

Are donor-driving funding mechanisms like Arizona's public education tax credits going to be the norm, particularly since they offer the much more attractive option of a tax credit as opposed to a charitable deduction? Or will taxpayers – and school districts – weary of making school funding a PR marketing and sales competition, rebuff the policy?—Rick Cohen