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	<title>Cato @ Liberty &#187; low income families</title>
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		<title>Dear Journalists, Donations Are Not &#8216;State Money&#8217;</title>
		<link>http://www.cato-at-liberty.org/dear-journalists-donations-are-not-state-money/</link>
		<comments>http://www.cato-at-liberty.org/dear-journalists-donations-are-not-state-money/#comments</comments>
		<pubDate>Tue, 17 May 2011 13:13:01 +0000</pubDate>
		<dc:creator>Andrew J. Coulson</dc:creator>
				<category><![CDATA[Education and Child Policy]]></category>
		<category><![CDATA[ACSTO]]></category>
		<category><![CDATA[brandon dutcher]]></category>
		<category><![CDATA[education tax credit]]></category>
		<category><![CDATA[low income families]]></category>
		<category><![CDATA[private donations]]></category>
		<category><![CDATA[private schooling]]></category>
		<category><![CDATA[tax credit program]]></category>
		<category><![CDATA[tax credit programs]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=31990</guid>
		<description><![CDATA[<p>By Andrew J. Coulson</p>Oklahoma has just joined the ranks of a half-dozen other states by enacting a K-12 education tax credit program. Under the new program, individuals or businesses that donate to non-profit School Tuition Organizations receive a tax cut worth 50 percent of the donation. STOs then use the funds to help low income families afford private [...]<p><a href="http://www.cato-at-liberty.org/dear-journalists-donations-are-not-state-money/">Dear Journalists, Donations Are <i>Not</i> &#8216;State Money&#8217;</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Andrew J. Coulson</p><p>Oklahoma has just joined the ranks of a half-dozen other states by enacting a K-12 education tax credit program. Under the new program, individuals or businesses that donate to non-profit School Tuition Organizations receive a tax cut worth 50 percent of the donation. STOs then use the funds to help low income families afford private schooling.</p>
<p><a href="http://www.greenfieldreporter.com/view/story/744be3fc30ae4f47a13523ba236f7cbd/OK-XGR--Scholarships-Tax-Credits/">Journalists for the Associated Press</a> and countless <a href="http://www.stamfordadvocate.com/news/article/Okla-gov-OKs-tax-credits-for-private-scholarships-1382108.php">other media outlets </a>routinely refer to donations made under education tax credit programs as &#8220;state money.&#8221; According to the <a href="http://www.acsto.org/pdfsanddocs/ACSTOvWinnSyllabusAndDecision.pdf">United States Supreme Court&#8217;s recent <em>ACSTO v. Winn </em>decision</a>, &#8220;that is incorrect.&#8221; This is a matter of settled law. To call these private donations &#8220;state money&#8221; is to misrepresent the facts and mislead readers.</p>
<p>It would be bad enough if the journalists and wire services misrepresenting these programs were simply unaware that they were distorting the facts, but in at least some cases they continue to do so even after having been apprized of their error. Brandon Dutcher, vice president for policy at the<em></em><em></em> Oklahoma Council of Public Affairs, wrote to the AP last week<a href="http://okschoolchoice.blogspot.com/2011/05/wherein-i-request-correction-from.html"> to correct their earlier erroneous coverage</a>. He received no reply and the errors continue.</p>
<p>I never cease to be amazed by this kind of behavior from an industry that is clinging for its life. The purpose of journalism is to apprize customers of the facts. Demonstrating indifference to the facts cannot be good for business.</p>
<p><a href="http://www.cato-at-liberty.org/dear-journalists-donations-are-not-state-money/">Dear Journalists, Donations Are <i>Not</i> &#8216;State Money&#8217;</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>As Used-Car Prices Soar, &#8216;Clunkers&#8217; Are Missed</title>
		<link>http://www.cato-at-liberty.org/as-used-car-prices-soar-clunkers-are-missed/</link>
		<comments>http://www.cato-at-liberty.org/as-used-car-prices-soar-clunkers-are-missed/#comments</comments>
		<pubDate>Mon, 16 May 2011 19:17:26 +0000</pubDate>
		<dc:creator>Walter Olson</dc:creator>
				<category><![CDATA[Tax and Budget Policy]]></category>
		<category><![CDATA[auto sales]]></category>
		<category><![CDATA[chris edwards]]></category>
		<category><![CDATA[gas prices]]></category>
		<category><![CDATA[japanese earthquake]]></category>
		<category><![CDATA[low income families]]></category>
		<category><![CDATA[new cars]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=31938</guid>
		<description><![CDATA[<p>By Walter Olson</p>Cato scholars have been appropriately scathing about the federal government&#8217;s 2009 &#8220;cash for clunkers&#8221; program, which paid several billion taxpayer dollars to have older cars scrapped and their engines destroyed, with owners getting vouchers toward new vehicles. When Chris Edwards nominated cash-for-clunkers as the &#8220;dumbest government program ever,&#8221; he listed among its effects: &#8220;Low-income families, [...]<p><a href="http://www.cato-at-liberty.org/as-used-car-prices-soar-clunkers-are-missed/">As Used-Car Prices Soar, &#8216;Clunkers&#8217; Are Missed</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Walter Olson</p><p>Cato <a href="http://www.cato-at-liberty.org/another-dumb-stimulus-idea-at-taxpayer-expense/">scholars</a> <a href="http://www.cato.org/pub_display.php?pub_id=10418">have</a> <a href="http://www.cato.org/pub_display.php?pub_id=10433">been</a> <a href="http://www.cato-at-liberty.org/cash-4-clunkers-fails-again/">appropriately</a> <a href="http://www.downsizinggovernment.org/failures-mount-cash-clunkers">scathing</a> about the federal government&#8217;s 2009 &#8220;<a href="http://en.wikipedia.org/wiki/Car_Allowance_Rebate_System">cash for clunkers</a>&#8221; program, which paid several billion taxpayer dollars to have older cars scrapped and their engines destroyed, with owners getting vouchers toward new vehicles. When Chris Edwards nominated cash-for-clunkers as the &#8220;<a href="http://www.cato-at-liberty.org/cash-for-clunkers-dumbest-program-ever/">dumbest government program ever</a>,&#8221; he listed among its effects: &#8220;Low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.&#8221;</p>
<p>Guess what&#8217;s the newest trouble to hit the car business? As <a href="http://www.fredericknewspost.com/sections/news/display.htm?StoryID=121207">news</a> <a href="http://www.connectamarillo.com/news/story.aspx?list=195067&#038;id=616585">outlets</a> <a href="http://www.mlive.com/business/west-michigan/index.ssf/2011/05/blame_high_gas_prices_japan_ea.html">around</a> the <a href="http://www.foxbusiness.com/personal-finance/2011/05/09/cheaper-buy-new-car-used/">country</a> are <a href="http://www.sun-sentinel.com/business/os-auto-scscolumn-051511-20110513,0,5286410.column">reporting</a>, the price of used cars has lately soared to a modern-day record, with some cars <a href="http://autos.aol.com/article/used-cars-that-are-worth-more-now/">commanding more used than they sold for when new</a>. News accounts commonly finger the Japanese earthquake and high gas prices as reasons, but there are some problems fitting either reason to the case. While the earthquake affected the supply of new cars, it&#8217;s the previously driven kind that has scored the more impressive price jump. And while the rise in gas prices would explain a relative shift in buyer demand from SUVs and trucks toward smaller vehicles &#8212; which has indeed happened &#8212; the strength of the used-vehicle market lately has been such that even the thirstier vehicles have advanced in price, $4 gas or no.</p>
<p>No doubt there are multiple reasons for the price spike, including the severe general slump in new-auto sales in recent years, which has reduced the volume of newer cars coming onto the resale market. But &#8212; as Washington <a href="http://dailycaller.com/2011/05/12/gms-profits-nothing-to-gloat-about/">scrambles to take</a> undeserved credit for whatever passes for normalization in the auto business these days &#8212; it&#8217;s worth remembering that an artificial scarcity of used cars isn&#8217;t just bad for the poor as a group: it&#8217;s bad in particular for the upwardly mobile poor, since in most of the country landing a job means needing to line up transportation to get to that job. When it suddenly costs $6,000 instead of $3,000 to get wheels, the move from unemployment to a paying job faces a new and discouraging barrier.</p>
<p>There&#8217;s a further irony too. Just as the federal housing stimulus lured many buyers into unwise house purchases at a time when home prices still had a good distance to fall &#8212; leaving them worse off in retrospect &#8212; so many owners who jumped for the cash-for-clunkers program would have been better off holding on to their cars a while longer. At least that&#8217;s what one might conclude from what Frederick, Maryland used-car dealer Robert Cox told his local paper, the <a href="http://www.fredericknewspost.com/sections/news/display.htm?StoryID=121207"><em>News-Post</em></a>: </p>
<blockquote><p>People who got $3,500 for the cars they turned in would probably get $5,000 to $7,000 for the same trade today, Cox said.</p></blockquote>
<p>Nice going, Washington.</p>
<p><a href="http://www.cato-at-liberty.org/as-used-car-prices-soar-clunkers-are-missed/">As Used-Car Prices Soar, &#8216;Clunkers&#8217; Are Missed</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>Should the Government Pay for Christian Science?</title>
		<link>http://www.cato-at-liberty.org/should-the-government-pay-for-christian-science/</link>
		<comments>http://www.cato-at-liberty.org/should-the-government-pay-for-christian-science/#comments</comments>
		<pubDate>Mon, 23 Nov 2009 16:57:40 +0000</pubDate>
		<dc:creator>David Boaz</dc:creator>
				<category><![CDATA[Government and Politics]]></category>
		<category><![CDATA[Health Care]]></category>
		<category><![CDATA[church of christ scientist]]></category>
		<category><![CDATA[Health]]></category>
		<category><![CDATA[health care bill]]></category>
		<category><![CDATA[House]]></category>
		<category><![CDATA[john kerry]]></category>
		<category><![CDATA[low income families]]></category>
		<category><![CDATA[same sex couples]]></category>
		<category><![CDATA[Senate]]></category>
		<category><![CDATA[senate bill]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=10290</guid>
		<description><![CDATA[<p>By David Boaz</p>Leaders of the Church of Christ, Scientist, are pushing to get a provision into the health care bill that would mandate equal treatment for &#8220;spiritual healing,&#8221; such as Christian Science prayer treatments. Sens. John Kerry and Orrin Hatch are trying to get it inserted into the Senate bill, according to the Washington Post. Kerry&#8217;s spokeswoman, [...]<p><a href="http://www.cato-at-liberty.org/should-the-government-pay-for-christian-science/">Should the Government Pay for Christian Science?</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By David Boaz</p><p>Leaders of the Church of Christ, Scientist, are pushing to get a provision into the health care bill that would mandate equal treatment for &#8220;spiritual healing,&#8221; such as Christian Science prayer treatments. Sens. John Kerry and Orrin Hatch are trying to get it inserted into the Senate bill, <a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/11/22/AR2009112202216.html">according to the <em>Washington Post</em></a>.</p>
<p>Kerry&#8217;s spokeswoman, Whitney Smith, <a href="http://www.latimes.com/features/health/la-na-health-religion3-2009nov03,0,6879249,full.story">told the <em>Los Angeles Times</em></a> that insurers would not be forced to cover prayer. Instead, she said, &#8220;the amendment would prevent insurers from discriminating against benefits that qualify as spiritual care if the care is recognized by the IRS as a legitimate medical expense. Plans are free to impose standards on spiritual and medical care as long as both are treated equally. It does not mandate that plans provide spiritual care.&#8221;</p>
<p>So far the provision has not been included in either the House or the Senate bill, but efforts are continuing. The <em>Post </em>reports that &#8220;opponents of spiritual care coverage &#8212; a coalition of separation-of-church-and-state advocates, pediatricians and children&#8217;s health activists &#8212; say such a provision would waste money, endanger lives and, in some cases, amount to government-funded prayer.&#8221;</p>
<p>To a lot of us, this sounds ridiculous. Pray if you think it helps. But why should that be the government&#8217;s business? And why on earth would we want the government to mandate that insurers cover <em>prayers</em>?</p>
<p>But if you want government health care, then this is the world you have chosen. We&#8217;ve already seen pitched battles over whether abortion should be covered by government programs, or government-subsidized programs, or insurance plans that participate in the government &#8220;exchange.&#8221; The House bill <a href="http://bucks.blogs.nytimes.com/2009/11/09/potentially-one-less-tax-penalty-for-gay-couples/">eliminates a tax penalty for same-sex couples</a> who receive health benefits from employers, but so far the Senate bill does not. The House bill provides grants to states for “home visitation” programs in which nurses and social workers counsel pregnant women and new mothers in low-income families, coaching them on “parenting practices” and skills needed to “interact with their child to enhance age-appropriate development” &#8212; a program that some American families would surely find Big Brother-ish.</p>
<p>But that&#8217;s the reality of government-funded and directed health care. If the government is paying for it, then every inclusion or exclusion &#8212; abortion, fertility treatments, prayer, same-sex couples, acupuncture, homeopathy &#8211; becomes a matter for political decision. And political decisions become the subject of political activity and lobbying, by groups ranging from Big Pharma to small insurance companies to nurses to Catholic bishops to Christian Scientists. No wonder <a href="http://www.usatoday.com/news/washington/2009-01-26-lobbying_N.htm">lobbying is up</a> in our increasingly politicized economy, particularly in the <a href="http://www.opensecrets.org/news/2009/10/federal-lobbying-boom-continue.html">health care arena</a>.</p>
<p>You can&#8217;t have government pay for something as personal and intimate as health care, and not find the government poking around in the bedroom, the medicine cabinet, the sickroom, and the chapel.</p>
<p><a href="http://www.cato-at-liberty.org/should-the-government-pay-for-christian-science/">Should the Government Pay for Christian Science?</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>A Dialogue on School Choice, Part 4</title>
		<link>http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-4/</link>
		<comments>http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-4/#comments</comments>
		<pubDate>Tue, 19 May 2009 17:00:06 +0000</pubDate>
		<dc:creator>Andrew J. Coulson</dc:creator>
				<category><![CDATA[Education and Child Policy]]></category>
		<category><![CDATA[Africa]]></category>
		<category><![CDATA[college]]></category>
		<category><![CDATA[colleges]]></category>
		<category><![CDATA[curriculum]]></category>
		<category><![CDATA[debate]]></category>
		<category><![CDATA[education]]></category>
		<category><![CDATA[educational freedom]]></category>
		<category><![CDATA[low income families]]></category>
		<category><![CDATA[markets]]></category>
		<category><![CDATA[Milwaukee]]></category>
		<category><![CDATA[monopoly]]></category>
		<category><![CDATA[naacp]]></category>
		<category><![CDATA[nea]]></category>
		<category><![CDATA[private school]]></category>
		<category><![CDATA[private schools]]></category>
		<category><![CDATA[private sector]]></category>
		<category><![CDATA[public schooling]]></category>
		<category><![CDATA[public schools]]></category>
		<category><![CDATA[pupil]]></category>
		<category><![CDATA[Rev. Joe Darby]]></category>
		<category><![CDATA[Robert Ford]]></category>
		<category><![CDATA[rural]]></category>
		<category><![CDATA[school]]></category>
		<category><![CDATA[school choice]]></category>
		<category><![CDATA[South Carolina]]></category>
		<category><![CDATA[state]]></category>
		<category><![CDATA[students]]></category>
		<category><![CDATA[tax credits]]></category>
		<category><![CDATA[taxes]]></category>
		<category><![CDATA[teachers]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=7300</guid>
		<description><![CDATA[<p>By Andrew J. Coulson</p>A tax credit bill was recently proposed in South Carolina to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children&#8217;s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would [...]<p><a href="http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-4/">A Dialogue on School Choice, Part 4</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Andrew J. Coulson</p><p>A  tax credit bill was recently proposed in South Carolina to give parents an  easier choice between public and private schools. It would do this by cutting  taxes on parents who pay for their own children&rsquo;s education, and by cutting  taxes on anyone who donates to a non-profit Scholarship Granting Organization  (SGO). The SGOs would subsidize tuition for low income families (who owe little  in taxes and so couldn&rsquo;t benefit substantially from the direct tax credit).  Charleston minister Rev. Joseph Darby opposes such programs, and I support  them. We&rsquo;ve decided to have this dialogue to explain why. Our closing comments  appear below, and the previous installments are <a href="http://www.cato-at-liberty.org/2009/05/12/a-dialogue-on-school-choice/">here</a> and <a href="http://www.cato-at-liberty.org/2009/05/13/a-dialogue-on-school-choice-part-2/">here</a> and <a href="http://www.cato-at-liberty.org/2009/05/15/a-dialogue-on-school-choice-part-3/">here</a>.</p>
<hr />
<div style="float: right; width: 47%;">
<div style="float: right; margin-bottom: 10px; margin-left: 20px; width: 110px;"><img title="Rev. Darby" src="http://www.cato.org/images/homepage/darby_coulson2.jpg" alt="Rev. Darby" width="100" /> <strong>Rev. Joe Darby</strong></div>
<h3>Closing Comment </h3>
<p>Thanks  for the research and references, Andrew, but I don&rsquo;t live in Milwaukee, Africa  or India &#8211; I live and grew up in South Carolina, and I remember when my state  resisted desegregation. I remember the news reports, white protests and  rhetoric about new private schools, where white children would be  &quot;safe.&quot; Attorney Tom Turnipseed, a repentant racist in Columbia, SC,  fought to create those schools and now willingly admits his prejudiced  motivation for doing so. That legacy needs to be acknowledged and those schools  need to demonstrate that they&rsquo;ve changed before many citizens will be  comfortable with them.</p>
<p>Many  white parents who didn&rsquo;t send their children to private schools in those days  simply couldn&rsquo;t afford to do so without governmental assistance. An irony of  American racism is that poor whites have also suffered, but have been  culturally conditioned to not collaborate with or trust those of other colors  who have common interests.</p>
<p>Having  said that, let me keep my promise from my last installment of our dialogue. You  noted that some private school parents of modest means have found ways to  augment government funding for things like transportation and uniforms. I said  that I wasn&rsquo;t surprised, because good parents will go to great lengths for  their children&rsquo;s well being &#8211; and have done so for years without public funding  of private schools. My wife and I did so when we were young, struggling  parents.</p>
<p>Our  sons attended V.V. Reid Kindergarten and Day Care in Columbia, SC &#8211; a 54 year  old private facility sponsored by Reid Chapel AME Church. That predominately  black school has a reputation for excellence and a long waiting list, and now  includes an elementary school. The tuition was &#8211; and still is &#8211; considerable,  but we paid it as a matter of parental choice. They also attended and graduated  from public elementary, middle and high schools &#8211; now labeled as  &quot;failing&quot; &#8211; and are now very successful men. They attended V.V. Reid  with the children of physicians and attorneys and the children of janitors and  cooks, but all of those children had one thing in common &#8211; their parents paid &#8211;  and still pay &#8211; the full tuition. V.V. Reid does not accept any government  funds and the current pastor, Rev. Norvell Goff, says that they aren&rsquo;t seeking  governmental funding and don&rsquo;t support tuition tax credits and scholarships. As  Rev. Goff said, &quot;Parents who care will pay the price.&quot;</p>
<p>That  points to what most puzzles me about the fight to give private schools public  money, allegedly to educate needy children. The idea&rsquo;s most consistently  strident uncompensated supporters in South Carolina are not those of modest  means or progressive political mind set, but conservative legislators and  interest groups who usually tell the needy to pull themselves up by their  &quot;bootstraps&quot; and consistently oppose what they call  &quot;handouts&quot; or &quot;pork&quot; for struggling communities. From  health care to infrastructure to housing, they condemn governmental involvement  in the private sector, but they make a remarkable exception for education.  Could they have had a miraculous social epiphany on education, or could they  possibly see a financial and social benefit for their constituents and  neighbors that wouldn&rsquo;t be rhetorically prudent in &quot;selling&quot;  privatization to struggling families?</p>
<p>I&rsquo;ll  conclude our dialogue with that question, with thanksgiving that a bipartisan,  biracial majority of our Senators killed South Carolina&rsquo;s current privatization  legislation last week, and with the wise and true words of SC Education  Secretary Jim Rex &#8211; when businesses consider locating in South Carolina, they  never ask, &quot;How are your private schools.&quot; Public education does  matter. I&rsquo;m also sure the issue isn&rsquo;t entirely dead, so be blessed, take care,  and we&rsquo;ll chat next year.</p>
<p>***  </p>
<p>The Rev. Darby is senior pastor of the AME Morris Brown Church in Charleston, and First Vice President of the Charleston Branch of the NAACP.</p>
</div>
<div style="float: left; width: 47%;">
<div style="float: left; margin-bottom: 20px; width: 110px; margin-right: 20px;"><img title="Andrew Coulson" src="http://www.cato.org/people/images/lowres/coulson.jpg" alt="Andrew Coulson" width="100" height="151" /> <strong>Andrew Coulson</strong></div>
<h3>Closing Comment </h3>
<p>You wrote that &quot;dangerous  buildings can&#8230; be expeditiously made excellent and secure while occupied and  before they catch fire&#8230;. The chronic inequities in public education can be  expeditiously addressed with will and commitment.&quot;</p>
<p>&quot;<em>Before</em> they catch fire&quot;? Nearly half of all children in South  Carolina <a href="http://www.edweek.org/media/ew/dc/2008/40sgb.sc.h27.pdf">drop  out before finishing high school</a>. Nearly HALF! Public schooling is burning  NOW. It&#8217;s been ablaze for decades, reducing countless children&#8217;s dreams to ashes.  Having another meeting to discuss fire codes would be madness. We need to get a  ladder to these kids <em>today</em>.</p>
<p>And &quot;fixed expeditiously  with will and commitment&quot;? Spending per pupil has more than doubled in  real terms over the past forty years. Two generations of would-be reformers  have worked feverishly to improve the system, passing one education bill after  another at the state and federal levels, and introducing countless revisions to  the curriculum and teacher training policies. Class sizes have been reduced,  teachers&#8217; salaries have been raised. Short of ritual sacrifices, there is  nothing that has not already been tried, repeatedly, to fix the public schools.<br />
  You wrote that &quot;studies on the  success of privatization&#8230; are a &#8216;wash&#8217; &#8212; each of us can find support for our  positions.&quot; This is simply not true. As I&#8217;ve noted, the research findings  comparing market to monopoly schooling all over the world <em><a href="http://www.informaworld.com/smpp/content~content=a909856259~db=all">favor  markets by a margin of 15 to 1</a></em>. That&#8217;s based on the most comprehensive  literature review to date. Social science, while imperfect, <em>is</em> science. And on this point, it is  unambiguous.</p>
<p>As  for your statement that South Carolina significantly and systematically  underfunds rural black districts along the I-95 corridor, I decided to check it  out. Using this year&#8217;s data from South Carolina&#8217;s <a href="http://www.scstatehouse.gov/sess117_2007-2008/appropriations2008/tap1b.htm">General  Appropriations spending bill</a>, I calculated the average expenditure per  pupil: $11,815. For rural districts along the I-95 corridor, it comes to $11,743  &#8212; a difference of $72. </p>
<p>You&#8217;ve  said that, in the wake of the civil war, some middle-class blacks excluded  lower-class blacks from their private schools. If that&#8217;s true, I would  certainly join you in lamenting their behavior. But who is guilty of this  cruelty today? Who is currently trying to keep poor young blacks from getting easier  access to private schools? The NAACP supports scholarships for low-income students  to attend private colleges, but fiercely opposes the same practice at the  elementary and high school levels. Who&#8217;s blocking the schoolhouse door now?</p>
<p>Fortunately,  school choice is advancing despite such misguided opposition. There are dozens  of choice programs around the nation, and the best among them are growing  rapidly and with bi-partisan support. Some black leaders of your own  generation, such as South Carolina Senator Robert Ford, have gotten on board.  Even more of <a href="http://content.usatoday.net/dist/custom/gci/InsidePage.aspx?cId=ozarksnow&#038;sParam=35033066.story">the  next generation of black leaders</a>, from Corey Booker in New Jersey to Kevin  Johnson in Sacramento, are on board as well. And some of <a href="http://www.youtube.com/watch?v=V34kYMm82oo">the most eloquent voices</a> in support of educational freedom are beneficiaries of school choice.</p>
<p>Perhaps,  if you talk with some of the tens of thousands of families benefitting from  school choice around the country, you&#8217;ll be convinced to join them aboard the  educational freedom train. It&#8217;s pulling out of the station regardless.</p>
<p>In  closing, I&#8217;d like to thank you for participating in this exchange. I hope  people on all sides of the debate have found it useful.</p>
<p>***  </p>
<p>Andrew Coulson is director of the Cato Institute&#8217;s Center for Educational Freedom, and author of <em><a href="http://books.google.com/books?id=3xi49dmYw0wC&#038;printsec=frontcover&#038;dq=market+education">Market Education: The Unknown History</a></em>.</p>
</div>
<p><a href="http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-4/">A Dialogue on School Choice, Part 4</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>A Dialogue on School Choice, Part 3</title>
		<link>http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-3/</link>
		<comments>http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-3/#comments</comments>
		<pubDate>Fri, 15 May 2009 16:10:23 +0000</pubDate>
		<dc:creator>Andrew J. Coulson</dc:creator>
				<category><![CDATA[Education and Child Policy]]></category>
		<category><![CDATA[education]]></category>
		<category><![CDATA[education tax credit]]></category>
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		<category><![CDATA[Jim Crow]]></category>
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		<category><![CDATA[Rev. Joe Darby]]></category>
		<category><![CDATA[school]]></category>
		<category><![CDATA[school choice]]></category>
		<category><![CDATA[South Carolina]]></category>
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		<category><![CDATA[The Beautiful Tree]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=7240</guid>
		<description><![CDATA[<p>By Andrew J. Coulson</p>A tax credit bill was recently proposed in South Carolina to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would [...]<p><a href="http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-3/">A Dialogue on School Choice, Part 3</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Andrew J. Coulson</p><p>A tax credit bill was recently proposed in South Carolina to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would subsidize tuition for low income families (who owe little in taxes and so couldn’t benefit substantially from the direct tax credit). Charleston minister Rev. Joseph Darby opposes such programs, and I support them. We’ve decided to have this dialogue to explain why. The previous installments are <a href="http://www.cato-at-liberty.org/2009/05/13/a-dialogue-on-school-choice-part-2/">here</a> and <a href="http://www.cato-at-liberty.org/2009/05/12/a-dialogue-on-school-choice/">here.</a>  The final installment is <a href="http://www.cato-at-liberty.org/2009/05/19/a-dialogue-on-school-choice-part-4/">here</a>.</p>
<hr />
<div style="float: right; width: 47%;">
<div style="float: right; margin-bottom: 10px; margin-left: 20px; width: 110px;"><img title="Rev. Darby" src="http://www.cato.org/images/homepage/darby_coulson2.jpg" alt="Rev. Darby" width="100" /> <strong>Rev. Joe Darby</strong></div>
<h3>Second Response</h3>
<p>We agree on something, Andrew &#8212; you don’t lock kids in a burning building while you try to put out the fire. Dangerous buildings can, however, be expeditiously made excellent and secure while occupied and before they catch fire, as was the case with the first church I pastored &#8211; all it took was will and commitment. The chronic inequities in public education can be expeditiously addressed with will and commitment. The most shameful thing about my state’s five year fight for scholarships and tax credits is that our legislators have spent time, energy and resources debating privatization, but haven’t taken a single step toward improving public education. They’ve simply chosen to argue over the merits of a new house while the old, still occupied house deteriorates.</p>
<p>I commend your zeal in gathering and noting studies, but like Biblical Scriptures, scholarly studies can be carefully chosen, subjectively interpreted and tactically presented to gain one’s desired result. At the end of the day, studies on the success of privatization and its impact on public schools are a &#8220;wash&#8221; &#8212; each of us can find support for our positions.</p>
<p>I remain convinced that privatization in South Carolina would not benefit low income families. Struggling parents who could claim tax credits would still have to pay tuition &#8220;up front,&#8221; and those tax credits would not cover the tuition for most quality private schools in South Carolina. Scholarships might help, but they aren’t guaranteed. I recently learned, however, of another troubling alternative beyond the proposed law from a parent in a state where privatization is a reality. She wrote me a letter telling how she received mailings touting private schools, noting that only bad parents leave their children in public schools, and offering to put her in touch with helpful tuition lenders. She took the bait, and is now in greater debt because of predatory lenders who preyed on a mother who simply wanted the best for her child.</p>
<p>You also said, based on expenditures in Charleston, that we’re already adequately funding our public schools &#8212; although Charleston is now facing a $10 million shortfall for the coming school year. Look beyond Charleston, Andrew, for South Carolina’s public schools are funded with a mix of state and local revenue. We have excellent schools along our state’s urban, businesses rich, predominately white and politically conservative I-85 corridor. The I-95 corridor, however, is rural, has a limited tax base, is predominately African-American, is politically progressive to liberal, and is bordered by some of the most underfunded and needy schools in our nation.</p>
<p>The I-95 corridor, however, was the site of a recent blessing. A mid-western businessman was so touched by the story of the J.V. Martin School in Dillon, SC, that he donated new desks and equipment to the school and paid for their installation and for campus painting. His voluntary and genuine generosity is a reminder that businesses with conscience and good motives don’t have to wait for statutory privatization to make a difference &#8212; they can make a difference in the public schools right now.</p>
<p>You also noted that resourceful parents have found ways to augment government funds for their children in private schools for things like providing transportation and buying uniforms. I’m not surprised by that, because good parents will go to great lengths for their children’s well being. They’ve been doing so for years &#8212; without public funds going to private schools. I can testify to that, because my wife and I did so when our sons were young and we were struggling parents, but I’ll save that story for my last installment in our dialogue.</p>
<p>***</p>
<p>The Rev. Darby is senior pastor of the AME Morris Brown Church in Charleston, and First Vice President of the Charleston Branch of the NAACP.</p></div>
<div style="float: left; width: 47%;">
<div style="float: left; margin-bottom: 20px; width: 110px; margin-right: 20px;"><img title="Andrew Coulson" src="http://www.cato.org/people/images/lowres/coulson.jpg" alt="Andrew Coulson" width="100" height="151" /> <strong>Andrew Coulson</strong></div>
<h3>Second Response</h3>
<p>You&#8217;ve cited two historical examples to suggest that school choice might hurt kids who remain in public schools. But as I noted <a href="http://www.cato-at-liberty.org/2009/05/13/a-dialogue-on-school-choice-part-2/">last time</a>, the evidence from actual choice programs shows that doesn&#8217;t happen.</p>
<p>Still, let&#8217;s take a closer look at the historical record. Public schools discriminated against and segregated black children for more than a century. Worse yet, an <a href="http://brownvboard.org/research/handbook/sources/roberts/roberts-198.htm">1850 Massachusetts supreme court ruling</a> upholding segregation in public schools was a key precedent cited by the U.S. Supreme Court to establish the &#8220;separate but equal&#8221; doctrine in <em><a href="http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&#038;vol=163&#038;invol=537">Plessy v. Ferguson</a></em> (1896). Jim Crow laws rested, in part, on a legacy of racist public schools.</p>
<p>It was common in the 19th century for public schools to require reading of the Protestant King James version of the Bible, and Catholic children who refused were sometimes <a href="http://books.google.com/books?id=3xi49dmYw0wC&#038;printsec=frontcover&#038;dq=market+education#PPA82,M1">whipped or beaten for the offense</a>. Such punishments were upheld by the Maine supreme court.</p>
<p>And while it is true that some racist whites tried to use private schools to flee integration, their more common tactic was to move to areas where the <em>public</em> schools remained overwhelmingly white. <a href="http://books.google.com/books?id=3xi49dmYw0wC&#038;printsec=frontcover&#038;dq=market+education#PPA275,M1">As I wrote in <em>Market Education</em></a>, &#8220;during the height of white flight&#8230; total private school enrollment actually <em>decreased</em> by 17 percent (public enrollment also decreased, but only by 3 percent).&#8221;</p>
<p>Public schools today may be somewhat more racially integrated than private schools in the earliest grades, but <a href="http://www.cato.org/research/education/marketresearch_coulson.html#4a">private schools are more integrated at the end of high school</a> &#8212; no doubt in part because public school dropout rates for black students are astronomical. Private schools have repeatedly been shown to <a href="http://www.cato-at-liberty.org/2008/07/30/depth-takes-a-holiday/">significantly raise graduation rates</a> over those found in public schools, even after controlling for other factors, especially for minority children. And when it comes to truly <a href="http://www.eric.ed.gov/ERICWebPortal/custom/portlets/recordDetails/detailmini.jsp?_nfpb=true&#038;_&#038;ERICExtSearch_SearchValue_0=EJ625858&#038;ERICExtSearch_SearchType_0=no&#038;accno=EJ625858">meaningful, voluntary integration</a> &#8212; the peers kids choose to sit with in school lunchrooms &#8212; private schools are significantly more integrated than public schools.</p>
<p>A few years ago, a friend of mine was seeking support for school choice among community leaders in the rural south. At one home, the man asked my friend: &#8220;So, black kids would be able to attend private schools like the one my kids go to?&#8221; My friend answered yes. &#8220;And they&#8217;d be prepared for the same kinds of jobs as my kids?&#8221; Again, my friend said yes. &#8220;Well now, I don&#8217;t think I can support that,&#8221; was the man&#8217;s reply.</p>
<p>That was an uncommon reaction, but it offers a glimpse into the mind of the modern racist. They see the upward mobility offered by school choice as a threat.</p>
<p>And there&#8217;s no need to make dubious analogies to the banking industry to understand how markets work in education. We can simply look at real education markets in action. Consider the new book <em><a href="http://www.catostore.org/index.asp?fa=ProductDetails&#038;method=&#038;pid=1441426">The Beautiful Tree: A Personal Journey into How the World&#8217;s Poorest People are Educating Themselves</a></em>. From the shanty towns and fishing villages of Africa, to the slums of India, to the rural farming villages of China, the poor are already abandoning public schools that have failed them and setting up their own private schools. These entrepreneurial schools outperform the local public schools at a tiny fraction of the cost, and the parents love them. </p>
<p>The higher labor costs in this country put private schooling out of reach of many poor families, but an education tax credit bill would change that. </p>
<p>You asked why we can’t fix the public schools <em>before</em> offering parents such a choice. The answer is simple: the way you &#8220;fix&#8221; a monopoly like public schooling is to inject consumer choice and competition. In other words, school choice <em>IS</em> the solution. We can’t fix public education without it.</p>
<p> ***</p>
<p>Andrew Coulson is director of the Cato Institute&#8217;s Center for Educational Freedom, and author of <em><a href="http://books.google.com/books?id=3xi49dmYw0wC&#038;printsec=frontcover&#038;dq=market+education">Market Education: The Unknown History</a></em>.</div>
<p><a href="http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-3/">A Dialogue on School Choice, Part 3</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>A Dialogue on School Choice, Part 2</title>
		<link>http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-2/</link>
		<comments>http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-2/#comments</comments>
		<pubDate>Wed, 13 May 2009 16:19:47 +0000</pubDate>
		<dc:creator>Andrew J. Coulson</dc:creator>
				<category><![CDATA[Education and Child Policy]]></category>
		<category><![CDATA[education]]></category>
		<category><![CDATA[education system]]></category>
		<category><![CDATA[educational freedom]]></category>
		<category><![CDATA[libertarian]]></category>
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		<category><![CDATA[mark sanford]]></category>
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		<category><![CDATA[public school teachers]]></category>
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		<category><![CDATA[pupil]]></category>
		<category><![CDATA[race]]></category>
		<category><![CDATA[Rev. Joe Darby]]></category>
		<category><![CDATA[school]]></category>
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		<category><![CDATA[South Carolina]]></category>
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		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=7201</guid>
		<description><![CDATA[<p>By Andrew J. Coulson</p>The South Carolina legislature is currently considering a tax credit bill intended to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The [...]<p><a href="http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-2/">A Dialogue on School Choice, Part 2</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Andrew J. Coulson</p><p>The South Carolina legislature is currently considering a tax credit bill intended to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would subsidize tuition for low income families (who owe little in taxes and so couldn’t benefit substantially from the direct tax credit). Charleston minister Rev. Joseph Darby opposes such programs, and I support them. We’ve decided to have this dialogue to explain why. Our initial comments <a href="http://www.cato-at-liberty.org/2009/05/12/a-dialogue-on-school-choice/">were posted Tuesday</a>. The next installment is <a href="http://www.cato-at-liberty.org/2009/05/15/a-dialogue-on-school-choice-part-3/">here</a>. </p>
<hr />
<div style="float: right; width: 47%;">
<div style="float: right; margin-bottom: 10px; margin-left: 20px; width: 110px;"><img title="Rev. Darby" src="http://www.cato.org/images/homepage/darby_coulson2.jpg" alt="Rev. Darby" width="100" /> <strong>Rev. Joe Darby</strong></div>
<h3>First Response</h3>
<p>Since this is a &#8220;dialogue,&#8221; let me focus on something that Andrew said in his first installment &#8212; that public education &#8220;&#8230;has failed because it lacks the freedoms and incentives that drive progress in every other field.&#8221; I take that as a defense of the &#8220;free market,&#8221; where competition allegedly leads to quality and success. I don’t think that the &#8220;free market&#8221; is the best model for education. To quote African Methodist Episcopal Church Bishop John Hurst Adams, one of my mentors, &#8220;the free market has limitations when it comes to the human condition, because it’s an amoral concept that ‘lets the market decide’ who swims and who gets swept away.&#8221; That’s applicable to the standard argument that private school choice would improve public schools through &#8220;competition.&#8221;</p>
<p>The first schools established for African-Americans following the Civil War were private schools. They sometimes, however, exclusively accepted the children of the black upper and middle economic classes while excluding the children of former slaves who struggled economically to survive. Public schools for African-Americans were decidedly and intentionally inferior, and the irony is that the opponents of quality public education in Charleston, South Carolina in that era included affluent African-Americans who saw good public schools as a threat to their private schools.</p>
<p>Public funds going to private schools would revive that tradition, for every tax dollar that &#8220;follows&#8221; a child to private schools in tough economic times will lead to understaffed and under-equipped public schools. Public school funding is set by legislators who are well aware that their constituents without children in the schools are loathe to fund them, and who’ve catered to those constituents by cutting funding for public education. There can be no true &#8220;competition&#8221; between public schools that only receive public funds and private schools that would have public and private funds at their disposal, for the free market turns on available capital.</p>
<p>The economic crisis now rocking markets in our nation and the world is also instructive. That crisis was, at least in part, created by policies that deregulated the free market and promoted not only innovation, but sheer greed which crafted a shaky, &#8220;house of cards&#8221; economy that has collapsed and taken people down with it. The lesson now, as it was during the Great Depression, is that unregulated free market activity can have disastrous results. I believe that the current financial crisis is also an element in the push for Private School Tuition Tax Credits. Many private schools are hurting because parents who can no longer afford high tuition are considering public school alternatives &#8212; private schools are hungry for the &#8220;bailout&#8221; that the pending South Carolina legislation would provide.</p>
<p>America makes the lofty claim in our Pledge of Allegiance to be &#8220;one nation under God.&#8221; If we’re serious about that, then we should heed the words of the Jesus who is seen as the Messiah by Christians and as God’s prophet by Jews and Muslims. He said that the Creator’s standard for right behavior includes equitable treatment for all people. That equity is at the heart of public education but is not a factor in free market competition, where the vagaries of the market decide outcomes and impact success in life. I said so six years ago in one of my conversations with my friend Mark Sanford, the Governor of South Carolina. He laid out his argument for private school choice over more funding for public schools in familiar, logical and compellingly Libertarian free market terms, but he never answered one question that I asked &#8212; why can’t we provide good public schools because it’s simply the right thing to do?</p>
<p>***</p>
<p>The Rev. Darby is senior pastor of the AME Morris Brown Church in Charleston, and First Vice President of the Charleston Branch of the NAACP.</p>
</div>
<div style="float: left; width: 47%;">
<div style="float: left; margin-bottom: 20px; width: 110px; margin-right: 20px;"><img title="Andrew Coulson" src="http://www.cato.org/people/images/lowres/coulson.jpg" alt="Andrew Coulson" width="100" height="151" /> <strong>Andrew Coulson</strong></div>
<h3>First Response</h3>
<p>Glad you brought up the objective studies, Joe, but you only mentioned one of them. I recently collected every scientific study I could find comparing outcomes between public and private schools (<em style="mso-bidi-font-style: normal;">Journal of School Choice</em>, vol. 3, no. 1). I came up with 65 studies that compare student achievement, cost-effectiveness, parental satisfaction and other measures. The results overwhelmingly favor private schooling. What&#8217;s more, the least regulated, most-market-like school systems stand out as the best of all (<a href="http://www.cato.org/pubs/pas/pa620.pdf">here&#8217;s an earlier version of the paper</a>).</p>
<p>Interestingly, there&#8217;s one study I couldn&#8217;t include because it wasn&#8217;t released &#8217;til a few weeks ago. It&#8217;s <a href="http://ies.ed.gov/ncee/pubs/20094050/pdf/20094050.pdf">the 3rd year DC voucher study</a> (the successor to the one you mentioned), and it shows that students who&#8217;d been attending private schools for the full 3 years are <em>2 school-years ahead of their public school peers in reading</em>! Even including the kids who&#8217;ve only been in the program for 1 year, the vouchers are now producing significant gains.</p>
<p>And there&#8217;s no evidence that school choice weakens the public schools. Professor Jay Greene looks at this question in his book <a href="http://books.google.com/books?id=vX2Bte9rTWMC&amp;pg=PA167&amp;lpg=PA167&amp;dq=%22school+choice%22+%22public+schools%22+forster&amp;source=bl&amp;ots=tZ5mITKD8G&amp;sig=vYvioHku_mgPAkXFzas60wmapv0&amp;hl=en&amp;ei=VsEJSpDvDIfQswPzq-HlCA&amp;sa=X&amp;oi=book_result&amp;ct=result&amp;resnum=2#PPA167,M1"><em>Education Myths</em></a>. He finds that public schools either improve under school choice programs, or are unaffected. So even the families that don&#8217;t choose to attend private schools will likely be better off, and certainly no worse off, than they are now.</p>
<p>Who would be the biggest beneficiaries of the SC education tax credit bill? Low-income kids. As noted in the preamble at the top of this column, only low-income families would be eligible for tuition aid from Scholarship Granting Organizations (SGOs). The amount of aid each family could receive from an SGO is not capped, so that assistance can be allocated based on individual need. Pennsylvania already has such a tuition-assistance program, serving over 40,000 students with bi-partisan support.</p>
<p>Parents who earn enough to owe state taxes would be eligible for direct tax credits to offset their own kids&#8217; education costs, but those credits are explicitly capped (at around $2,800, if their kids are not zoned to attend a &#8220;failing&#8221; public school &#8212; more if they are).</p>
<p>It&#8217;s certainly reasonable to wonder how poor families would cope with transportation and any non-tuition costs, but we can just look at how scholarship tax credit programs are working in states like Pennsylvania and Florida: some schools provide transportation, some are within walking distance, some families form carpools, and others use public transportation. Tens of thousands of poor children manage to get to their private schools under these programs every day, and to obtain uniforms for the schools that require them. Many others do so even without scholarships.</p>
<p>As for wanting to start by fully funding public schools&#8230; we&#8217;re already there. The <a href="http://www.ccsdschools.com/Departments_Staff_Directory/Operations_Division/Budgeting/documents/FY2008AuditReport.pdf">2007-08 budget for Charleston</a> public schools lists total expenditures at over $548 million (p. 21) for 40,202 students (p. 4). That&#8217;s $13,650 per pupil &#8212; more than the state and national averages, which are both about $12,000. These numbers are vastly higher than the median U.S. private school tuition, which <a href="http://nces.ed.gov/Surveys/SASS/tables/affil_2004_whs.asp">the Department of Education reported as $3,500</a> in 2003-04 [the most recent year available]. And only <a href="http://www.goldwaterinstitute.org/Common/Files/Multimedia/1137.pdf">about a fifth</a> of private school revenue comes from sources other than tuition. Even if tuitions have doubled since then, they&#8217;d still be barely half of Charleston&#8217;s per pupil spending.</p>
<p> I&#8217;ll have to wait &#8217;til next time to address your concern about the history of school choice, since I&#8217;ve run out of word count. In the meantime, here&#8217;s a thought:</p>
<p> There&#8217;s nothing wrong with trying to fix the public schools. But you don&#8217;t lock kids in a burning building while you try to put out the fire.</p>
<p>***</p>
<p>Andrew Coulson is director of the Cato Institute&#8217;s Center for Educational Freedom, and author of <em><a href="http://books.google.com/books?id=3xi49dmYw0wC&#038;printsec=frontcover&amp;dq=market+education">Market Education: The Unknown History</a></em>.</p>
</div>
<p><a href="http://www.cato-at-liberty.org/a-dialogue-on-school-choice-part-2/">A Dialogue on School Choice, Part 2</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>AEI Tax Forum</title>
		<link>http://www.cato-at-liberty.org/aei-tax-forum/</link>
		<comments>http://www.cato-at-liberty.org/aei-tax-forum/#comments</comments>
		<pubDate>Tue, 12 May 2009 20:16:34 +0000</pubDate>
		<dc:creator>Chris Edwards</dc:creator>
				<category><![CDATA[Tax and Budget Policy]]></category>
		<category><![CDATA[american enterprise institute]]></category>
		<category><![CDATA[federal policies]]></category>
		<category><![CDATA[federal tax credits]]></category>
		<category><![CDATA[income tax rate]]></category>
		<category><![CDATA[kevin hassett]]></category>
		<category><![CDATA[larry lindsey]]></category>
		<category><![CDATA[low income families]]></category>
		<category><![CDATA[redistribution plan]]></category>
		<category><![CDATA[tax]]></category>
		<category><![CDATA[tax code]]></category>
		<category><![CDATA[tax credits]]></category>
		<category><![CDATA[taxes]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=7182</guid>
		<description><![CDATA[<p>By Chris Edwards</p>   Photo by Peter Holden Photography for AEI I was a panelist at an American Enterprise Institute forum today discussing the proliferation of federal tax credits, particularly for low-income families. AEI scholars Kevin Hassett, Larry Lindsey, and Aparna Mathur have a draft paper that looks at the idea of consolidating current individual credits into one supercredit. The idea would [...]<p><a href="http://www.cato-at-liberty.org/aei-tax-forum/">AEI Tax Forum</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Chris Edwards</p><div style="float: right; margin-bottom: 5px; margin-left: 5px; width: 300px;">
<p><img title="Chris Edwards, Photo by Peter Holden for AEI" src="http://wac.0873.edgecastcdn.net/800873/blog/wp-content/uploads/200905_blog_edwards.jpg" alt="Chris Edwards, Photo by Peter Holden for AEI" width="300" /><br />
<span style="font-size:10px;">   Photo by Peter Holden Photography for AEI</span></div>
<p>I was a panelist at an American Enterprise Institute forum today discussing the proliferation of federal tax credits, particularly for low-income families.</p>
<p>AEI scholars Kevin Hassett, Larry Lindsey, and Aparna Mathur have a draft paper that looks at the idea of consolidating current individual credits into one supercredit. The idea would be to simplify the system and reduce the economic distortions created by these credits, which are valued at about $170 billion in 2009.</p>
<p>My observations included:</p>
<ul>
<li>Obama&#8217;s Make Work Pay credit is valued at about $60 billion per year, much of which is &#8221;refundable.&#8221; (That means it is partly a spending increase not a tax cut). Coincidentally, Obama&#8217;s proposed tax hikes for higher-income individuals are also about $60 billion per year. So Obama is damaging the economy with &#8220;Make Work Not Pay&#8221; tax increases at the top in order to fund dubious work incentives at the bottom. It makes no economic sense.</li>
<li> The AEI scholars provide interesting calculations about how we could make the $170 billion of redistribution in these credits simpler. That&#8217;s fine as far as it goes, but I&#8217;d like to end the redistribution altogether. Let&#8217;s provide a large basic exemption in the tax code for folks at the bottom, but we don&#8217;t need any complex credits. Instead, let&#8217;s repeal federal policies that damage the budgets of struggling families at the bottom, such as import barriers that raise the price of clothing and federal milk cartels that raise the price of  dairy products.</li>
<li>Here&#8217;s my compromise redistribution plan. Let&#8217;s chop the $170 billion in tax credits in half and use the extra funds to cut the corporate income tax rate. With a purely static calculation, that would allow cutting the corporate rate  from 35% to 25%. Assuming some behaviorial feedbacks, the $85 billion in credit savings would easily allow us to reduce the corporate rate to 20% or so.</li>
<li>What do corporate taxes have to do with the workers who currently get all these tax credits? <a href="http://www.aei.org/paper/24629">As Hassett and Mathur explained in a 2006 paper</a>, corporate tax cuts would increase investment, improve productivity, and that in turn would raise wages of average American workers. We don&#8217;t need President Obama&#8217;s fancy new Make Work Pay credits. Instead, we need to cut the corporate tax rate to make the economy boom and raise worker&#8217;s wages and incomes in the private marketplace.</li>
</ul>
<p><a href="http://www.cato-at-liberty.org/aei-tax-forum/">AEI Tax Forum</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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