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Economic Benefits of PA Education Tax Credit Program: Unfounded Claims

As the election approaches, Pennsylvania’s Educational Improvement Tax Credit (EITC) program continues to be presented as a model for school choice expansion, but claims about its merits are often unfounded. The Commonwealth Foundation which promotes free-market ideas, and the Reason Foundation which advances libertarian principles including free markets, published a largely debunked report (DeAngelis, 2020) claiming economic gains if the EITC is dramatically expanded. Don’t be fooled by the official looking document or the statistics presented.

The National Education Policy Center supported a review (Baker, 2020) of the report’s methods, assumptions, and findings and found a disturbing lack of relevance between many of the studies cited and the PA Educational Improvement Tax Credit program, concluding “the report is of no practical use to policymakers and others” (Baker, 2020, p. 3).


[Photo by Markus Winkler on Unsplash]


Baker’s analysis points out, “Because the largest positive economic impact estimate from the report is based on a false premise, misrepresentation (excluding relevant studies showing large negative effects) and misapplication of research findings (substituting charter school estimates), the study is of little value for informing policies pertaining to Pennsylvania’s tuition tax credit program. One simply cannot extrapolate the economic benefits of a tuition tax credit program to expand private school enrollment in Pennsylvania based on estimated reading achievement gains derived from charter schools across the country (though limited to specific major operators and disproportionately in specific cities and states). This is especially true when the preponderance of recent evidence on students attending private schools through vouchers and tax credits points to worse, rather than better, outcomes -- particularly in mathematics. As such, applying the report’s own methods, it is more likely that Pennsylvania would suffer significant economic losses, not gains, by expanding the tax credit scholarship program,” (Baker, 2020, p. 10).


The report makes claims that expanding tax credits, as proposed in 2019, would nearly double the number of students using scholarships to attend private schools, bringing that number to 102,085 students. It further claims this would result in increased academic achievement, increased graduation rates and college completion, and reduced crime all of which would result in economic benefits to the state.


There is no evidence that the 50,000 students currently receiving scholarships depended on those funds to choose a private school. When Pennsylvania added Opportunity Scholarships to the EITC in 2012, legislators claimed that an additional 15,000 students would be “rescued” from public schools. They increased the tax credits by $50,000,000 in 2012, yet saw the percentage private school enrollment decline from 11.90% to 11.61% between the 2011-12 and 2013-24 school years (Ambrose, 2019).

Pennsylvania’s EITC is popular among school choice advocates and politicians, because it has few regulations and is widely available through generous family income guidelines. However, if proponents wish to make bold claims about academic and economic benefits of the program, Pennsylvania legislators must change the legislation to allow the data collection necessary to show who is using these scholarships, family income, student academic performance, school attendance, and migration from public schools to private schools.

Legislators and members of the public need factual information that can only be obtained from data collection. Biased reports based on false premises, misrepresentations and misapplications of research, and inappropriate mathematical applications such as those published by the Commonwealth Foundation pose a danger to students and schools in Pennsylvania.

Citations in order of appearance:


DeAngelis, C. A. (2020). Unleashing Educational Opportunity: The Untapped Potential of Expanded Tax Credit Scholarships in Pennsylvania. https://www.commonwealthfoundation.org/docLib/20200813_UnleashingEducationalOpportunityDeAngelis08_13_2020reduced.pdf

Baker, B. D. (2020). NEPC Review: “Unleashing Educational Opportunity: The Untapped Potential of Expanded Tax Credit Scholarships.”. http://nepc.colorado.edu/thinktank/tax-credits

Photo credit: Photo by Markus Winkler on Unsplash

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