Letters...

Letters…

Five Flaws...

The article entitled “The Five Flaws in Arizona’s Private School Tax Credit Program” was quite objectionable.

I consider the Professor’s first three “flaws” actually benefits. This particular Arizona program is one of the very few in the country where taxpayers have made a small inroad to take back any control of the government’s mangling of education in general. To the extent the tax credit programs are free of tests, regulation and outside “oversight” the measure of their worth is increased.

The first three “flaws” can effectively be considered as some of the most beneficial aspects. No income testing, allowing some control and a dearth of regulation are to be praised. I work in business and wish such “flaws” could expand to most of my world.

The fourth item complains about potential abuses and cites what a reasoned reviewer would acknowledge is a perfectly legal endeavor under the law. He becomes more explicit and implies that his cited “abuse” is not good public policy. Ipso facto, he recounts a perfectly legal transaction and his only complaint is that a church was the beneficiary of that transaction. I would be much more interested in what the contributors had to say than I would any outside observer. Would he alter his stance if he learned that the vast majority of contributors heartily approved of the church contribution? More likely, his point was that churches should in all cases be prohibited possessors of any tax credit-generated funding. Fair enough. Would he feel better about that organization if he learned that only three percent of the church members were above the six-figure income? Would the ACLU be a more apt recipient of that overage? My point: it is the function of the organization, not the Professor, not the State and not I, to make those determinations. Leave us some freedom, sir.

Oh, would that the federal government and the State of Arizona operate under such a simple standard as imposed upon the tuition credit organizations, spending 90% on the correct functions of government and only wasting no more than 10%. Does he wish to increase the 90% threshold? (I can’t help but wonder if NAU would now have any budget difficulties if it only had a 10% overhead.)

As to the fifth “flaw,” we may forgive the Professor as an academic, for his apparent lack of interaction with the business world. This State, and the federal government can not audit but a small fraction of business and personal tax returns. The majority of for-profit business do not require an audit or any lesser level of review. Thank goodness. To call for more, not less government intervention and to attempt to eviscerate this one minuscule victory that taxpayers have, is diametrically opposed to my point of view. I am sorry the Society provided a very nicely packaged, glossy presentation of this position. I hope the Legislature does not put the weight of the Society’s view as being in support of this position.

It is nearly beyond comprehension that the Professor is the president of a school tuition organization, for his views, if taken to their logical conclusion, would at best, reduce such as his organization to an “income-tested” restricted, regulated and less capable entity. At worst, they would eliminate it entirely.

In his concluding paragraphs, he states “it would make more sense to take the millions of dollars related to the public school tax credits and allocate the total on a per-student basis directly to public schools.” In other words, take the individual’s capacity to put their money where they can see it working effectively and throw it into the government trough to be doled out in a simplistic, unfair method that, although egalitarian, guarantees that bad public schools continue being bad and that good schools and programs suffer.

The credit works. The credit improves the quality of education in Arizona. State funding of education has not been as beneficial. I am aware of many poor children who have received a scholarship to a private school that would not have without the credit. I am saddened that we as a professional society, may have helped raise a blow against that credit. No matter how offhanded and obtuse the statements he makes, the author advocates in a manner harmful to the credit and therefore to taxpayers as a whole.

Sincerely,

Bradley S. Penner, CPA

Prescott, Arizona

...I believe you left out the number one flaw with these tax credits and almost all tax credits that Arizona idiotically implements. These credits if you just looked at the surface are seriously flawed in the fact that they are less than revenue neutral to the state and its schools when you add up all the costs to implement and monitor for the schools and the state government. I believe they are a money loser to the state and its schools and need to be revamped or better yet repealed in their entirety.

Not knowing the exact figures, but logic tells me since these are dollar for dollar credits that are deducted from the state revenue, when you add up the administrative burden to each of the schools for additional people, postage, printing costs, the time expended in trying to promote and publicize the tax credits etc, the state, the schools and most of all the children all lose because there is now less money available for the schools and the state on a statewide basis.

For example when a person sends the school $200, their state taxes go down by $200. So far no problem, the state has $200 less but the school now has $200 more, appears revenue neutral. Take a further look: Now the state has to employ auditors to review these deductions not to mention the people employed by the state to review the reports sent in by the schools thereby costing the state more due to this extra administrative burden. What is this cost to the state? Maybe 10-15% of the lost revenue?...

The state now has $200 less in its budget (multiplied by all the people who donate) to give back to the schools plus the additional cost in personnel and other administrative burdens at the state (and school) level to monitor these programs which even using a conservative 10-15%, costs the state an additional $20-30. If we eliminated these programs in their entirety and instead let the legislature direct the money in the most efficient manner possible, the schools would end up with more money to spend on the children.

If the programs live on, a suggestion for this credit would be that instead of dollar for dollar credits, make them a percentage of the amount contributed. In this way, it would encourage individuals to give more than the maximum allowable credit, the schools would get more money, and the state would lose less. Limiting the credits to no more than 20% of the amount contributed would at least cost our state much less than what it is costing now. Individuals would still contribute, probably at a higher rate, and the schools would be better off.

Chris Weinell, CPA

Tucson, Arizona

Editor’s note: Letters have been edited for length as space permits. Letters are welcome and can be sent to Patty Gannon at pgannon@ascpa.com.