There May Be a Silver Lining in Trump/MAGA’s Federal Education Scholarship Tax Credit Program

When Democrats regain power in all the branches of the federal government, one of the first legislative acts they must take is undoing all the horrible provisions of the Trump/MAGA Big Billionaire Reverse Robin Hood law that has robbed safety net security from the poor and the country’s clean energy dominance in order to pay for tax cuts for the one percent that they do not need.

That said, there are a few provisions in the horrible bill that may merit tweaking and improving.

No tax on tips is one. Democrats probably lost Nevada alone based on that campaign promise.

The creation of baby accounts that could accrue interest and be paid out when the holder reaches adulthood is another.

One possible third provision of the horrible MAGA Bill that may need warrant a second look is the Federal Education Scholarship Tax Credit that made it into the legislations final cut.

While most supporters of public education have objected to this legislative nugget because they see it as a trojan horse opportunity for the nation’s wealthiest to fleece hard earned middle and working class taxpayer dollars to pay for their child’s private education, Michelle Dimino, the Director for Education Policy at Third Way, pointed out in an op-ed for the Washington Post, that the language for the tax credit allows Governors and State Legislatures in blue and purple states to set the approval criteria for which public or private educational organizations these tax credit proceeds can be awarded to in order to:

“…Maximize the benefits to public school students by focusing on the full breadth of services these scholarships can cover — such as expanding high-quality tutoring, improving technology access and offsetting transportation costs so more students can participate in public school choice options such as open enrollment.”

Earlier in the article, Dimino asserted:

“…People who donate to designated scholarship-granting organizations can receive a nonrefundable, dollar-for-dollar tax credit of up to $1,700. The recipient organizations can use those donations to fund scholarships and other expenses for students attending public or private schools, including tutoring, after-school programs, learning materials, Advanced Placement exam or dual-enrollment fees, and services for students with disabilities. The effect is more money for students at no direct cost to states.”

Comparing this tax credit scholarship to the Medicaid Expansion provisions of Obamacare/the Affordable Care Act, Dimino wrote:

“The parallels to Medicaid expansion are glaring. When the Affordable Care Act introduced the option to expand Medicaid coverage to more low-income adults, most red states resisted. But public support and the significant federal funding attached led many to reconsider — and more than a decade later, just 10 holdouts remain. The pressure for blue states to opt into this new program might likewise only grow.”

“State budgets will soon feel the strain of other provisions in the reconciliation package that cut funding for health care and basic needs programs, creating a downward squeeze on discretionary education funding. Scholarships funded by the new program could help fill those gaps. It’s worth noting that there is no cap on the total size of the tax credit program; how much funding each state receives will depend on the volume of donations to eligible scholarship-granting organizations.”

With regards to flexibility, the Blog for Arizona asked Third Way to confirm that the state has the ultimate say in what organizations would qualify to be scholarship recipients and not the Federal Government.

Their Communications Director, Kate deGruyter replied:

“Yes—states will have to submit a list each year of approved organizations. There is going to be a Treasury rulemaking process before the program takes effect, so specific federal parameters could still evolve, but Michelle says the law is clear that states will ultimately approve the participating scholarship granting organizations.”

In Arizona, where the billion dollar Empowerment Scholarship Account (ESA) Welfare for the Wealthy Scam Program has showcased numerous examples of waste, fraud, abuse, theft, hoarding, and creating phantom students, the idea that this federal education scholarship tax credit program could somehow be helpful to poor children and public school organizations seems too good to be true.

Tyler Kowch, Communications Manager for Save our Schools Arizona commented to Blog for Arizona:

“While the DC voucher vultures are urging states to opt in to Trump’s new federal voucher program, here in Arizona, we can see with our own eyes that vouchers are inequitable by design, rife with fraud and waste, and devastating to our public schools. Arizona already has six different voucher programs — none of which equitably benefit public school students. We have zero reason to believe that the Trump administration is concocting one that does.
In fact, Trump’s federal MAGA voucher comes straight from Project 2025, which is a guidebook to destroying public education while bolstering unaccountable, nontransparent private options that waste taxpayer dollars and harm public school students. We encourage Arizona’s state leaders to not take the bait for a voucher program that will only double down on the inequities, fraud, and lack of transparency and accountability in our state’s failed voucher fiasco – and to instead push for equitable, robust public funding for the 92% of Arizona students and families who actively choose our public schools.”

North Carolina Governor Josh Stein has already voiced an interest in taking advantage of the language in this tax credit scholarship program.

If Arizona Governor Katie Hobbs and Democrats in the State Legislature can participate with Republicans to set reasonable approval criteria and designate mainstream organizations that could help public school children, then this may be a good option to gain needed funds for the Grand Canyon States public educational institutions.

They should at least consider the possibility and see where this goes in discussion and proposed legislation. If MAGA Republicans try to steamroll their own private and homeschool scholarship choices, the Governor should veto them.

This, like Medicaid, free school lunches, ESA reform, and water security, would be excellent issues for Hobbs and Democrats to run on in the 2026 campaign.

Just something to consider.