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Education Reporter

Tax Credits Foster School Choice in Pennsylvania
Rep. Sam Rohrer
Rep. Sam Rohrer
HARRISBURG, PA - Businesses in Pennsylvania have begun applying for $30 million in tax credits in return for donations to scholarship organizations under the state's new Education Improvement Tax Credit (EITC) plan. The tax credit legislation was authored by Rep. Sam Rohrer (R), and was signed into law May 17 as part of Pennsylvania's education-reform package.

"This is the best tax credit law in the country because it provides the maximum amount of help to needy children with no government strings attached," explains Rep. Rohrer. "We've been working on the concept of tax credits for eight years, and were finally able to pass a bill that supports the concepts of free enterprise and limited government."

The EITC law became effective on August 15. By the end of the first day, 190 businesses had contributed $7.8 million to eligible scholarship organizations.

Under the plan, K-12 scholarships may be awarded to families with one child and a household income of $60,000 or less, with an additional $10,000 allowance for each additional eligible student and dependent household member. Scholarship organizations must be recognized by the IRS as non-profit, 501(c)(3) and must distribute at least 80% of their annual receipts to eligible students. The tax credit for participating businesses is 75% (against taxes owed) and credits will be awarded on a first-come, first-served basis. The maximum allowable deduction is $100,000.

A September 5 Wall Street Journal editorial quoted Verizon Pennsylvania CEO Dan Whelan as saying: "The [tax] credits are great for kids, but down the road they also address our ever-increasing difficulty in finding people who can pass entry-level tests for employment in good jobs."

The editorial observed that, "if opponents of school choice continue to block vouchers at every turn, they shouldn't be surprised if the pent-up demand for reform comes in through the back door of tax credits."

The Pennsylvania Education Association, the state's largest teacher's union, did call the tax credit program "a back-door voucher plan," but dropped its opposition when supplemental public school programs were included in the scholarship program.

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