Democrats Should Not Ignore the Federal Tax Credit Scholarship

Two decades ago, HBO’s The Wire portrayed Baltimore’s school system as being plagued by bureaucracy, corruption, and low outcomes. The show was fiction, but the reality today is no better. The district remains one of the worst in the nation, with only 12 percent of its fourth-graders proficient in math and 13 percent proficient in reading. 

I know what those numbers look like in person. As a college student, I spent time in Baltimore helping provide after-school programming for a small number of the city’s students. I remember a room full of curious, engaged fifth graders going silent when asked to read a single paragraph aloud. They didn’t lack intelligence or motivation, but they did lack the educational opportunities to prove it. 

For far too long, students in communities like Baltimore have been underserved by America’s one-size-fits-all education system. But there is now a tool that can help, the Federal Tax Credit for Scholarships. All it requires is for a governor to decide that the state should participate, allowing students and families to reap the benefit of additional education funding.

The federal tax credit, which is effective January 1, 2027, allows taxpayers to claim a nonrefundable federal income tax credit of up to $1,700 per year for qualified donations to scholarship-granting organizations (SGOs). These SGOs can provide scholarships to low- and middle-income families, helping cover educational expenses for their K–12 students, including tuition, extracurriculars, tutoring, and curriculum materials. 

So far, only two Democratic governors among the 24 in office, Jared Polis of Colorado and Kathy Hochul of New York, have opted in. By comparison, only one Republican governor has not yet opted in. Low support among blue-state governors isn’t because the tax credit is unpopular; polling by Democrats for Education Reform shows that 61% of Democrats support their governor opting into the tax credit. And in states like Maryland, some polling shows that nearly 80 percent of Democrats support the FTCS. 

The disconnect between Democratic voters and elected officials becomes even more puzzling when not opting in would leave millions of dollars in K-12 investment on the table. A recent analysis from Democrats for Education Reform suggests that if only one percent of eligible California taxpayers earning $85K or more participated, an estimated $103 million in scholarship donations would go to students in the state. Yet if Governor Newsom declines to opt in, not only will that money disappear for California’s students, but Californians can instead send it to students in states that opted in.

A common argument from critics is that the FTCS would defund public schools. This is a fallacy. Funding comes exclusively from federal tax credits. If taxpayers do not use the tax credit, the money stays with the United States Department of the Treasury. Education budgets would be untouched. If anything, additional funds could be provided for public school students since they are eligible to receive scholarships for educational expenses that supplement what their districts provide. 

Another benefit of the FTCS is that it could close K-12 opportunity gaps. As Marc Porter Magee, founder of 50CAN, has argued, the best predictor of what American education will look like in thirty years is what the wealthiest families do for their children now. A recent 50CAN survey of over 23,000 parents shows students from higher-income families are far more likely to attend private schools, receive tutoring, participate in summer programs, and engage in extracurricular activities. The FTCS allows families to avoid waiting 30 years to take advantage of these opportunities.

For example, access to the FTCS could mean two or three additional weekly sessions with a reading or math tutor for a student. That could be the difference between a child entering middle school ready to learn and one falling further behind. For public school students in districts across the country that have limited access to art, music, theater, debate, field trips, and physical education, the FTCS offers benefits, too, as scholarship-granting organizations can step in to help public school students afford these beneficial learning opportunities.

There is still time for Democratic governors to opt in, but the window for elected officials to show they truly believe that low- and middle-income families should have access to the same education resources that wealthier families already enjoy is closing. For the sake of the kids I watched struggle to read aloud in Baltimore, who are now in high school, and for so many others just like them, I hope no governor will deny these kids access to resources that could help them learn. The students I worked with couldn't afford to wait for educational access then. They certainly shouldn't have to wait any longer.