Roy makes a good argument about the conceptual distinction between vouchers and tuition tax relief. I agree that they address different problems and sets of recipients. That’s why I’d like to see both. The state should offer means-tested, fairly generous scholarships to low-income students and/or those stuck in chronically low-performing public schools. At the same time, the tax code should recognize two distinct aspects of parental spending on private education. In the first place, as several have said, private-school families are essentially using their own resources to divert potential clients out of public schools, thus saving taxpayer some money. A little “diversion assistance” in the form of a tax credit would seem to be reasonable, in the sense that families are aiding the government monetarily by paying tuition.
In the second place, educating your children is a form of human-capital investment. That is, you are spending money today in order to generate an economic return tomorrow (in the form of wages earned by your children). This return will itself be taxed as income. Just as it is appropriate to exclude investment principal — such as deposits into traditional IRAs — from the income tax, since the return on that principal is already going to be taxed when it is realized or consumed, similarly education expenses ought to be tax-deductible, at least up to some cap.
The answer to the question, I think, is that both devices are justifiable and offer the welcome prospect of expanded choice and opportunity.
