More on the private school tax credit

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by David Safier

I commented last night that I don't understand the mechanism of the private school tax credits, called back-door vouchers or neovouchers by those of us who dislike the idea. I know you can give money to private schools and get your money back when you pay taxes, but I don't know if you can give it directly to the school or if you have to go through one of the tuition tax credit organizations.

Here is an answer from AZW88, but I'm not sure it clears the matter up:

I believe that the tuition tax credit organizations can use the money as they see fit unless specifically designated by the donor. (BTW: this is something that you can do with your public school donations: you can designate the purpose and/or program that your $$ goes to)

These organizations were set up to get around the separation of church and state issue, since the donation goes to a 'separate organization' and not directly to the school. To make things worse, you can give $1000 to these organization, whereas you can only give $400 to a public school.

My question remains: if I want to give my tax credit dollars to one private school, can I send my check to that school like I can to a public school?

I think the answer is No. It looks like it has to go through a "School Tuition Organization" (STO). And according to Arizona law, the requirement for the STO is that it

allocates at least ninety per cent of its annual revenue for educational scholarships or tuition grants to children to allow them to attend any qualified school of their parents' choice.

That means an STO can keep 10% of all the tax credit money it collects. Great work if you can get it.

According to the Arizona Educational Association, guess who owns the biggest STO in the state. 

Representative Steve Yarbrough owns the largest STO that took in over $10.9 million of tax credit money in 2006, over 21% of all tuition tax credit dollars collected.

Great work if you can get legislate it.

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