Education Investment Tax Credit

 Education Investment Tax Credit: By any measure, the State has cut funding and available funding streams via taxes increases to public school districts. Now the State proposes a first come, first served tax credit that would take $150 million of available funds from education in year one and $300 million in year two, and use that money provide a tax credit to individuals who donate money to schools,including private and charter schools—up to $1 million. NYS Senator Liz Kreuger explains it this way:

“Under this new tax credit the 'charitable contribution' would be deductible on federal and state individual taxes, and wealthy donors would get money back on their federal income taxes. That is, wealthy donors will make taxpayer-funded' profit' on any contributions made under this provision, in addition to getting back the entire amount of their contribution. At the top marginal federal and state income tax rates, a wealthy tax payer could end up with a 'profit' of nearly $300,000 on a contribution of $1 million."

She continues: “This is not philanthropy, it is tax avoidance for those who least need tax reductions and it will leave a permanent hole in the state budget.”

Under some versions being considered, a donor could own a building, rent space in that building to a charter school, donate an amount equal to the rent to that school, claim the tax credit, take the amount of the donation off his or her tax bill, AND get a refund of that amount on federal taxes. That’s a triple benefit to the building owner.

Philosophically, it is problematic because it allows wealthy people to cherry pick what level of education will be available which students, because some schools will be better funded than others. Cities like Niagara Falls are not likely to benefit from any such donations. Where does that leave our children? Moreover, the funds for the credit will come from monies previously earmarked for public education.