Michigan GOP Lawmakers Pass Legislation That Would Create Tax Credits for Donors Giving to Scholarship Programs

Under proposals passed along partisan lines, taxpayers can claim a credit against their income taxes for donations to nonprofits, which would send money to eligible students’ accounts.

The Republican-led Legislature passed bills on Tuesday that would allow for private donors and corporations to get tax breaks for paying for kids to go to private and religious schools.   

The fast-tracked legislation, introduced less than a week ago, would let individual and corporate taxpayers claim a 100% credit against their income taxes for donations to nonprofit organizations, which would send money to eligible students’ accounts. The GOP-controlled Senate passed the bills earlier on Tuesday, followed by the House. 

Using public money for private schools is banned under the state constitution.   

“The courts have reaffirmed this language [a 1970 voter-approved constitutional amendment] over and over and over again. Our public school students have won every single time.” –Rep. Darrin Camilleri, (D-Trenton)

Sen. Dayna Polehanki (D-Livonia) says this is another attempt by Republicans to privatize Michigan schools.  

“These bills are voucher schemes that have been shamelessly introduced during a pandemic that would send Michigan taxpayer dollars mainly to private and religious schools while giving generous tax benefits to wealthy donors.”  

Polehanki says the plan would cost the state a lot of revenue.   

“My colleagues from across the aisle who sponsor these bills were unable to answer what they would cut in the budget to make up for a billion-dollar revenue loss.”  

A Senate fiscal analysis found that if the max value for the tax credits grew each year, it would cost the state $1 billion by year five. It’s unclear that even if it’s enacted the voucher program would grow at this rate.   

Republicans say the bills would boost educational opportunities for disadvantaged kids and give parents additional choices.  

Sen. Tom Barrett (R-Charlotte) says the measure is about equity. 

“These opportunity scholarships will allow us to expand the services that we already provide to students to hopefully best prepare them for the challenges and hopefully potential opportunities they’ll have as they grow here in Michigan.” 

Gustavo Portella, communications director of the Michigan Republic Party, says the legislation would help students who experienced learning loss last year as a result of last year’s pandemic shutdowns. 

“Michigan students suffered under out-of-touch Gretchen Whitmer’s rule when she shut down schools affecting students of all walks of life,” says Portela. “We’re in support of this legislation because it provides students the opportunity to catch up on the learning loss created by Gretchen Whitmer and gives parents the flexibility and control to address their child’s unique challenges, especially after a tough year.” 

State Has Strictest Ban on Public Assistance for Private Schools 

K-12 students would be eligible if their family income is no more than double the cutoff to receive free or reduced-priced lunch — $98,050 for a family of four — they have a disability or they are in foster care. 

Students attending private schools could get up to $7,830 this year, or 90% of the state’s minimum base per-pupil funding. Those in households with incomes at 100% to 200% of the free and reduced lunch program threshold would receive less on a sliding scale. 

Children enrolled in public schools could get a maximum of $500, or $1,100 if they are disabled. 

The scholarships could pay for school-related expenses: tuition, fees, tutoring, computers, software, instructional materials, summer school, transportation costs, athletic fees, educational therapies and school uniforms. State tax revenue would be cut by as much as $500 million in the first year, and public schools would see a drop in funding depending on how many kids switch to private school because of the scholarships. 

The Michigan Constitution says “no public monies or property” can be used to “aid or maintain” private schools. It is the nation’s strictest constitutional ban on providing public assistance to nonpublic schools. 

Abby Mitch, spokeswoman for Senate Majority Leader Mike Shirkey, said the tax credits are “not public funds. It is ostensibly private funds being reallocated through the state to parents.”  

But critics, including Michigan’s largest teachers union, said the proposed program is clearly illegal under a 1970 voter-approved constitutional amendment. 

“The courts have reaffirmed this language over and over and over again. Our public school students have won every single time,” says Rep. Darrin Camilleri (D-Trenton). 

The bills were approved 20-16 and 55-48 in the Senate and House. Final votes cannot occur until next week. 

The legislation — if it passes the House — would likely be vetoed by Gov. Gretchen Whitmer.   

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