Why education tax credits are a great deal

December 25, 2014
Jim Swanson
The Republic

Now that the political rhetoric and election drama is over, let's get down to what we as individuals and corporations can do, right now, to help move the needle on making quality education accessible for all kids in Arizona.

In 2000, our state leaders wisely implemented legislation allowing school-tuition organizations, enabling non-profit, private organizations to collect donations for tuition at qualified private schools. Two years later they passed legislation allowing tax credits for donations to public schools.

These two milestones are a testament to the innovativeness of our political leaders, yet they net too few participants.

Deferring dollars from "general funds" and investing them in focused community-level education makes great business sense, with a net-zero effect on your balance sheet. Here are the facts:

  • Individuals can donate up to $200 to public schools, and married couples filing jointly can donate up to $400 for extracurricular programs and receive a full tax credit on your tax return.
  • Single individuals can also donate up to $1,053 or married filing jointly up to $2,106 to qualifying school-tuition organizations for private-school tuition aid.
  • The icing on the cake? Through the corporate tax credit, business owners of Arizona based C-corporations can donate to school-tuition organizations as well, with no cap on contributions, and receive a dollar-for-dollar tax credit.

As the leader of a private-sector business, I enthusiastically support these programs and believe they are some of the best-kept secrets in our state's revenue department. I am proud to say our company has donated significantly to the Brophy Community Foundation and the New Way Academy Foundation, shaving hundreds of thousands from our annual tax liability and helping financially at-risk students attend private schools throughout Arizona.

On a personal level, I also support these programs because it's putting money where it should be, making a quality education accessible to kids who otherwise could not afford it, with no bottom-line impact on me.

According to the Arizona Department of Revenue, out of total tax collections in 2013, public-school tax credits amounted to approximately $51 million, and private-school tax credits for low-income students was just more than $108 million. That's out of total income-tax collections of $3.5 billion.

According to my calculations, that leaves a lot of room for improvement.

It's time to take notice and take action. Even if we can't agree on our politics, surely we can all admit that our schools can make better use of our money than Uncle Sam can. I challenge us all to step up and help our education system the way we are able — by taking advantage of these tax credits before the government does.