June 2001
Education Tax Credits Deserve an "A"
by Claudia R. Hepburn
May 9 was a banner day for education in Ontario. On that day, the Harris government took a monumental step to free families and improve schooling in the province by introducing a new education tax credit. This credit heralds the beginning of a new era of educational quality, equity, and choice for our children.
Until now, Ontario students have been forced to attend their local public school regardless of its quality.1 Students, their parents, and society have suffered from dwindling academic standards, unresponsive school boards, a paucity of choice, and regular job "actions" in their schools. According to a recent poll, among parents and teachers alike, satisfaction with the education system is at an all time low in Ontario.
Perhaps the Harris government has finally understood that when parents want out, it's better to let them go than to hold them hostage. The new Equity in Education tax credit does just that. It acknowledges that our publicly-run schools aren't serving many students well. While the government has a responsibility to improve public schools in every way conceivable, at the end of the day, parents should have the right to decide if the public product is the best product for their child.
Until now, in Ontario, that right has been reserved for affluent parents who can afford to pay for education twice—both in their taxes and in private school tuition. That's about to change. Starting next year, all parents of school-age children will be eligible for a refundable tax credit of 10 percent, up to $700 per child, of private school tuition. The credit will increase each year until it is worth 50 percent, or up to $3,500 per child in 2006, still somewhat less than half what Ontario spends to educate each child in the public system. This means that when the plan is fully implemented, parents and taxpayers will share 50-50 the cost of tuition at independent schools that charge $7,000 or less. For every dollar up to $7,000 that parents spend on school tuition per child, they will pay 50 cents less on their tax bills. Families paying less than $3,500 in provincial income tax will be sent a cheque by the Ontario government for the balance. Hence the tax credit is refundable, and as such valuable to all parents, not just those who earn enough to pay provincial tax.
The refundable tax credit is the first of its kind in Canada, but is in line with the growing national and international recognition that public education monopolies perennially fail students. It acknowledges that imprisoning low-income families in poorly performing schools is wrong.
The popular logic—that children must be forced to attend bad schools against their parents' will for the good of the system and other students—is both immoral and flawed.
First, it is wrong for the same reason that forced bussing of black students in the United States was wrong a generation ago, and that forcing Native Canadians into public residential schools was wrong before that. Those democratically-conceived plans were also meant for the good of the students, but are now rightly viewed as an unacceptable exercise of power over a disenfranchised minority group, the ends of which did not justify the means.
Forcing students to support failing schools is also damaging to the education system we, as a society, hold so dear. Countless studies have proven that when parents' choice of schools improves, so do the schools (Hepburn, 1999; 2001). Tax credits that empower families to change schools will force schools, school boards, and governments to stop squabbling and get on with the job of teaching. If they don't, the children will leave and go somewhere that does.
In other words, competition works the same way in education as it does in every other field of human endeavour. This has been demonstrated time and again around the world. A study of 39 countries—the largest study of educational efficiency ever made—found that competition from private schools was one of the four crucial factors that fostered higher educational achievement. This happened in New Zealand, where students' test scores were significantly below those of their peers in other countries before the government implemented universal school choice (McTigue). Ten years later, their scores are well ahead of international averages.
In the United States, renowned Harvard economist Caroline Hoxby (1998) proved the power of parental choice yet again when she compared American cities that had less school choice with those cities that had more. After controlling for a host of other likely factors, she found that choice increases academic achievement and future earnings while decreasing the cost of education. Increased choice, equity, achievement, and satisfaction, are exactly what the new refundable tax credit will produce.
What more could we hope for from a new education initiative?
Note
1 The exceptions to this are francophones and Catholics who have had their choice of publicly funded Separate schools as well as their local public school.
References
Hepburn, Claudia R., ed. (2001) Can the Market Save Our Schools? Vancouver: The Fraser Institute, forthcoming.
Hepburn, Claudia Rebanks (1999). The Case for School Choice: Models from the United States, New Zealand, Denmark and Sweden. Critical Issues Bulletin. Vancouver: The Fraser Institute.
The Honorable Maurice McTigue, Distinguished Visiting Scholar, George Mason University. Keynote Address to the Children First America Founder's Meeting. May 3, 2001, Washington, DC.
Hoxby, Caroline M. (1998). "Analyzing School Choice Reforms That Use America's
Traditional Forms of Parental Choice." In Learning from School Choice.
Washington DC: The Brookings Institution. (133-155). To be reprinted in
Can the Market Save Our Schools? Vancouver: The Fraser Institute, forthcoming.
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Claudia R. Hepburn (claudiah@fraserinstitute.ca) is Director of Education Policy at The Fraser Institute, and a former teacher. She has a B.Ed. and an M.A.from the University of Toronto. She works in Toronto.
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