Nebraska is among at least two dozen states that are considering bills linked to school choice that threaten to undermine the promise of public education.
Earlier this month, the Nebraska Legislature gave first-round approval to LB 753, a bill which provides a dollar-for-dollar tax credit for money donated to organizations that provide scholarships for students attending private schools.
That means someone who gives a $100,000 donation to a scholarship-granting organization and who has at least $200,000 in income tax liability could claim a tax credit in Nebraska equal to their donation. Their income tax liability would be dropped to $100,000.
That same $100,000 donation to a public school foundation in Nebraska, however, would only allow the donor an income tax deduction, reducing the amount of income on which they’d pay taxes by at most $6,640.
Another bill, LB 165, would allow tax-deductible donations to a college savings plan to be used to pay tuition at a K-12 school of choice.
While federal law now allows state 529 plans to be used for private K-12 tuition, LB 165 goes a step further by creating a new state-level tax deduction for private school tuition. If approved, families could use these accounts to receive an immediate tax deduction for their private school tuition.
Under LB 165, a taxpayer could put $10,000 into their child’s NEST account and then turn around and withdraw that same amount for private K-12 tuition.
These bills in the Nebraska Legislature would further narrow our state’s income tax base in support of private school tuition. Nebraska would initially commit $25 million a year to funding the tax credits in LB 753 and $2.5 million to LB 165 tax deductions, money that otherwise could be spent to support Nebraska’s public schools.
The Center for Budget and Policy Priorities reviewed similar proposals under consideration this year and the history of school voucher programs.
According to the Center’s report, there is limited evidence of such programs expanding opportunities for students with the highest needs.
Additionally, residents of rural areas have asserted that public schools are crucial to their communities, where private education options are often limited or non-existent.