Published by the Freedom From Religion Foundation, Inc. FFRF.org

FFRF urges IRS to end private school tax handout

Vol. 35 No. 9 November 2018

FFRF is urging the IRS to approve a proposed rule change that would terminate a massive voucher-like tax break.

The Internal Revenue Service was seeking public comments on a rule that would, among other things, put a stop to a widespread practice of taxpayers legally profiting by donating to private religious schools.

The tax loophole works this way: First, some states provide dollar-for-dollar tax credits for donations to educational scholarship programs, which keep some of the funds for themselves and pass the rest on to private schools, most of which are religious. So, if you donate $100,000, the state takes $100,000 off of your state tax bill. Next, the federal government gives a deduction on federal taxes on the same donation. After donating $100,000 and having the state pay you back in full, you also get to deduct $100,000 from your federal taxes. The vast majority of private schools benefitting from such programs are religiously affiliated. Tuition tax credits almost entirely subsidize religious schools with overtly religious missions. For example, in North Carolina, 92 percent of students receiving public money through “opportunity scholarships” have used it to attend religious schools.

“There is no legitimate reason for the federal government to encourage taxpayers to donate to educational scholarship programs,” FFRF Co-Presidents Dan Barker and Annie Laurie Gaylor write in a letter to the IRS. “The government should be focused on promoting secular public education and should never incentivize taxpayers to fund religion. Allowing taxpayers to profit from a donation to an educational scholarship program directly encourages taxpayers to support religion.”

Plus, this tax scheme invites fraud due to a lack of accountability.