[Congressional Record Volume 148, Number 76 (Tuesday, June 11, 2002)]
[House]
[Pages H3442-H3449]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EDUCATION TAX CREDITS
The SPEAKER pro tempore (Mr. Keller). Under the Speaker's announced
policy of January 3, 2001, the gentleman from Colorado (Mr. Schaffer)
is recognized for half the time remaining before midnight, or
approximately 50 minutes.
Mr. SCHAFFER. Mr. Speaker, tonight I rise to discuss the issue of
education in America and the topic more specifically is around
education tax credits, a proposal which has been circulating through
some of the back rooms in Congress so far. We have been talking about
this publicly for a long time and many States know quite a lot about
this. We have been working to construct a bill which is almost ready
for introduction. We are dealing with some of the final discussions
with the committee of jurisdiction in that legislation.
If we have Members interested in the topic of education tax credits
and would like to participate, I would like to invite my colleagues to
join me. I know there are several Members who I anticipate will be
joining me shortly.
Education tax credits are probably the most exciting innovation with
respect to education that we will have a chance to consider this year
in Congress. First, perhaps, I would explain a little bit of the
history of how we got to the point of putting a pretty serious
education school choice initiative to the point where we will be
bringing it to the floor and considering it in Congress. That history
goes back to the Presidency of George W. Bush, when he campaigned for
the Presidency.
[[Page H3443]]
He did so on a strong education component of his platform, predicated
on the great accomplishments that he had achieved for the State of
Texas when he served as governor of that State. That was amplified on a
national level in his proposals that called for increasing
accountability through testing and other diagnostic measures with
respect to school performance and closing the achievement gap between
underserved children and those of greater means financially.
The second proposal that President Bush spoke about was school
choice, and the third most important element of his platform involved
school flexibility. In other words, having the government propose that
the Federal Government would eliminate all of the rules and red tape,
strings, and the heavy oversight that the Federal Government has become
known for with respect to administering Federal education programs
through the States and ultimately to local jurisdictions, to
school boards and local schools.
When the President became the President and got himself elected and
came up to the Hill proposing a pretty bold plan to follow through on
those campaign proposals, he put together a proposal called Leave No
Child Behind which had those three key elements, accountability,
flexibility and school choice, which were a part of that initial plan.
It was met with tremendous fanfare, as Members recall. There were big
press conferences which rolled this bill out. Particularly those who
are active members of the Committee on Education participated in the
drafting of that legislation.
Unfortunately, something happened on the way back to the President's
desk, and that is just a sliver of the President's initial vision
remained in that bill which was titled H.R. 1, and that is the fault of
the Congress, certainly not of the President, because as that proposal
was introduced, before it had its first hearing, the school choice
components were ripped out of the bill, which were the core elements of
the President's proposal, the most important part. And the same with
the flexibility provisions, those provisions were watered down
considerably to the point where after the Senate finished with that
proposal, they were barely recognizable. To the credit of the Congress,
the one portion that the Congress maintained in the President's initial
vision was the accountability provisions, and that we see carried out
through a massive new Federal effort toward national testing.
Having said all that, the most important provisions of the
President's vision have still been unresolved, and we still have to
achieve them and that is what this tax credit initiative is about
trying to accomplish. We are looking for a way to provide more
flexibility to parents and to school boards and to local schools to try
to find a way to create a new wave of private, voluntary investment in
America's schools, a way to eliminate the discrimination between
government-owned institutions and those owned by nongovernment
entities, whether they are nonprofits or churches, or perhaps owned by
private organizations of other sorts.
And finally, we are trying to find a way that really gives parents
the power that they need in order to make greater choices as to the
kind of education and academic settings that are available to their
children, and this academic education tax credit plan helps to
accomplish that. It does so by bypassing the Federal Government all
together. The tax credit proposal does not envision changing Federal
education law or even tampering with the U.S. Department of Education.
Instead, this proposal is one that addresses the Federal Tax Code and
provides a direct tax benefit to American taxpayers if they will send
their cash that they otherwise would send to the Federal Government to
a local school.
Mr. Speaker, I yield to the gentleman from Michigan (Mr. Hoekstra) to
explain the history and where we are trying to go with this tax credit
proposal.
Mr. HOEKSTRA. Mr. Speaker, I thank the gentleman for taking the
leadership position on this education tax credit proposal. A few years
ago, the gentleman and I embarked on a process with members of the
Subcommittee on Select Education of the Committee on Education and the
Workforce, to talk about education at a crossroads. What we wanted to
do was identify what the Federal role in education was, and we also
wanted to go around to America and find out what is really working in
education.
What we discovered in terms of what happens to the Federal dollars
and what happens in terms of decisionmaking is that we found that the
person who is doing the work and paying the taxes by April 15, they
send their money to the Treasury Department. We in Washington, whether
it is H.R. 1, or any series of education bills here in Washington, will
allocate that money and say we are going to spend this much money here
and this much there. Politicians get into the debate where exactly the
money is going to go.
As we found out in the welfare reform debate recently, that debate,
pretty much the way that the debate on education went, we forget about
how we are trying to serve. In the welfare reform debate, the debate
was not whether the policies and programs would help the people on
welfare, the debate was where the decision would be made as to how
those dollars would be spent. Some of the politicians here in
Washington were scared because we were actually going to make some of
the decisions not here in Washington, but move some of the
decisionmaking down to lower levels.
So it was not worrying about what worked and what did not, but who
gets to make the decision. We had some of those same debates on
education as to what policies are we going to mandate in Washington to
make sure that people at the State level, people at the local school
district level, and people at the local schools make the right
decisions.
So it goes through this process of politicians in Washington deciding
what we are going to do. The money flows down to the States and the
States decide how it is going to be allocated, and it goes down to the
local school. What we find is we have this whole bureaucracy in place
deciding how we are going to spend the Federal education dollar,
forgetting about who paid the taxes in the first place and forgetting
too often about the child that we are trying to educate.
What we found out was a couple of things. Number one, when you put a
dollar into the top of the funnel, at the end you only get about 65
cents into the classroom actually educating the child. The other thing
that we found is the most effective programs at the State and local
level.
{time} 2230
When we talked to parents, when we talked to principals, when we
talked to superintendents, when we talked to teachers, and said, what
is really working in your schools, we were hoping that they would come
back and say, well, you know, we only get 7 percent of our money from
Washington, but, boy, that English as a second language, man, that is
the right program, that is the program that is really making a
difference, or any one of the alphabet type of programs that we have
here.
That was not what we got. They said all we get from Washington is
bureaucracy, mandates, paperwork, and those types of things. What
really works is local innovative programs because those can be tailored
to an individual school.
So as the gentleman from Colorado (Mr. Schaffer) said, we are not
talking about changing the system. We tried that. We tried to move more
decision-making to the State and local level, tried to move more
decision-making to parents. We did not win on that. The bureaucracy and
the folks who wanted control here in Washington, they won that battle.
So we are just saying, okay, this system stays in place. For those who
want those controls and those types of things, it is going to stay
here. It is well funded. This is a healthy budget. It continues to get
healthy increases, and we are not going to try to slay that dragon.
What we want to do is we want to create another mechanism to get more
dollars to the student, and maybe my colleague would like to take us
through exactly the difference between this model and how a tax credit
complements this in terms of growing our investment, moving decision-
making down to a local level, and it really forms a very nice
complement to what this system is not able to do.
Mr. SCHAFFER. Mr. Speaker, before we move on, it is important just to
underscore that this really is a picture of
[[Page H3444]]
the way Federal education dollars go from taxpayer down to student, and
it is a system that is not designed by accident. It is one that is very
deliberately conceived here in Washington and put into place over years
and years of Federal tampering and meddling in the whole education
system; and it is important, before we go on to why a tax credit is
important and why it is important to try to connect in a more direct
way the taxpayer with the child, to go through each of these agencies
just so we have a sense, once again, of why the politics are so
difficult here in Washington to put children first.
The Treasury Department is a huge agency in and of itself, and we
have had to go meet with the Treasury Department, and we just did that
last week, with respect to this tax credit proposal. They are
interested in the way we are proposing to change the tax law because
they are the ones who administer it. So it is important to them and
they care about it. The politicians here represent those of us here in
Congress.
Mr. HOEKSTRA. If the gentleman will continue to yield, Mr. Speaker,
when we met with the Treasury, great folks, but it was not about what
is best education policy. It was what is best tax policy.
Mr. SCHAFFER. Mr. Speaker, that really is the whole point and why it
is so important here because the Treasury Department people, their
focus is the Tax Code. That is their job. That is their mission in
life. That is what they do for a living, and when we go meet with them
to talk about tax credits, that is the level of discussion we have to
raise is how do we utilize the Tax Code to accomplish what we think, as
representatives of our constituents, is in the best interest of the
people. So we have to talk in Treasury language when we go to the
Treasury Department. And they were genuinely helpful. I appreciated
that meeting, and I think things are going great over there, but the
child down here at the bottom was not the focus of that discussion is
the point.
The legislators, and the politicians here in the Congress, of course,
we respond to a great variety of priorities throughout the country.
There are 435 of us just in the House. Across the Capitol here, there
are another 100 of us. So we have got all kinds of priorities we are
trying to balance. So politics becomes the important element in how we
establish priorities here in the House and in the other body.
The Department of Education, of course, their function is to answer
to the Treasury Department and to the politicians; so when we give the
money to them, we have got another bureaucracy, a whole other culture
that exists in the Department that deals with answering questions up
here in committee hearings and also sending these dollars further down
this education bureaucracy.
Mr. HOEKSTRA. If the gentleman will yield, again on the oversight
committee, we finally I think are getting a handle on this, but for
much of the nineties, this Department of Education that gets about $40
to $45 billion per year could not even give us a clean audit. They
could not tell us where the money was going or how it was being spent.
That is interesting. If you get to a local school board, those things
are audited. If there is a problem with the books, immediately there is
a State takeover. Here you have got a $40 billion agency, like I said,
that now I think finally under the Bush administration, there is
accountability here, they know where the money is going; but for the
longest period of time, they did not even think enough about $40
billion to actually account for where the money was going.
Mr. SCHAFFER. They have to account for how those dollars are spent by
States which is where those dollars go next. Once the money goes to the
States, the States have those dollars distributed by more politicians,
State legislators, those dollars go to their State departments of
education, from there to the school districts, from the school
districts through the political process there, ultimately to the
school, and then finally down there to the child. My point being is
that each one of these agencies within this bureaucratic model, they
have their own function, their own focus, their own set of goals and
objectives; and often they do not match up. They are not consistent.
Here in Washington as conservatives who are just kind of
antibureaucracy types like those of us represented here tonight, when
we try to change this system and make it more efficient, we step on a
lot of toes, as you can see. These agencies, these State bureaucracies,
and the school districts, they have tremendous political influence here
in Washington. In fact, the teachers union is probably the most, I do
not think you would get much argument, is the most powerful political
influence here in Washington, D.C., in terms of a single special
interest group. So this is a huge, massive bureaucracy, that has a
tremendous political force here in Washington.
Talking about changing, this is something we need to do and will
continue to do. We are not going to give up on that, but we have not
been too successful, unfortunately. So the tax credit proposal is a way
to try to just cut all that bureaucracy out of the middle. We have not
invented this idea in Washington. This idea actually originated in
several States, one of which is the State of Arizona. I yield to the
gentleman from Arizona (Mr. Shadegg) to tell us a little bit about the
experience of education tax credits in his State.
Mr. SHADEGG. I thank the gentleman for yielding. What I would like to
do, I will talk a little bit about our experience in Arizona, but I
also would like to kind of get down to the nitty-gritty questions that
I think a lot of people ask, and people who might be watching tonight
might be curious about. People are interested in improving education in
America and want to know how to do that. But I think that is critical.
I guess I ought to begin by saying that I come at this from the
perspective of someone who my entire education was in the public school
system, but more recent experience than that is my wife is a public
school teacher in Phoenix, Arizona. She teaches kindergarten. I have
two sisters, both of whom are teachers, both in the public school
system in Arizona, and then I have a niece who is a teacher in the
public school system in Tucson, Arizona. And so I come from a family
that is pretty deeply steeped in public education. Of course to achieve
any kind of reform, and you were just talking about how difficult it is
to achieve reform, you have to kind of convince people to take a leap
of faith, to try a new idea.
As you pointed out, we in Arizona tried a new idea. We have tried
education tax credits, and I think they have worked extremely well.
That does not mean that everybody in Arizona is yet convinced or
already on board and it does not mean that the teachers and the
teachers unions in Arizona are not still skeptical, but I think it
would be important for either of you as the lead proponents on this
legislation to kind of lay out what you believe tax credits will do and
why public school teachers like my wife, my two sisters, and my niece
ought to embrace this idea. Because we have to win them over. We cannot
achieve this without them.
I know our experience in Arizona has been that by creating a tax
credit for education, in Arizona it is capped at $500, we have been
able to allow young children trapped in schools that were not meeting
their needs to get a scholarship that enables them to go to a school of
their choice and to get a high-quality education, because money is made
available to them that they could not otherwise access. That money lets
them go to a different school. I also believe it has not only not
damaged the public education system in Arizona, it has helped the
public education system in Arizona because these are essentially
additional resources for education. It is not less money to educate
America's schoolchildren; it is, rather, more money to educate our
schoolchildren. But I think that is a critical question, and I would
invite your response to it.
Mr. SCHAFFER. You are precisely correct. If you once again take a
look at the bureaucratic model of getting taxpayers' cash to children,
this system really serves no one well. It really creates a nightmare
for public school teachers, for public school administrators. What we
want to do is start to treat these teachers and administrators like the
real professionals that they are. That is why not only should they be
enthusiastic about education tax credits, but they really are.
Look at this. This is how tax credits work. We replace this
bureaucratic
[[Page H3445]]
model of getting taxpayer dollars to children with one that is much
more direct, one that is better represented by this chart here, where
we have the same taxpayer, the same child, no bureaucracy in the
middle.
Here is how it works. Here is how our proposal would work. An
individual who makes a $500 contribution to a school, either a public
school or to a scholarship fund to allow children who are poor or are
just challenged with respect to the financial means to attend the
school of their choice, the taxpayer who contributes to those kind of
organizations would get half of their cash back in the form of a tax
credit. This is money that today the same taxpayer is funneling here to
Washington, D.C., if they would give those dollars to the child, give
it to the scholarship organization, the Federal Government is going to
give them a portion of that cash back. We are essentially by changing
the Tax Code making it easier to just give your dollars directly to the
educational pursuit in your community, the priority that makes sense to
you, rather than send it here to Washington and have it go through all
that nonsense that is represented by the education bureaucracy.
Mr. HOEKSTRA. Remember, this is the model that says the taxpayer puts
in a dollar and 60 to 65 cents makes it to the classroom. On the other
hand, this model says we have gotten rid of all this stuff in the
middle and the taxpayer puts in $2, and it only costs the government a
dollar. So here we grow our investment in education and we grow it for
all students, public schools, private, parochial schools, we grow the
dollar. In this one we shrink it. What a sharp contrast.
Mr. SCHAFFER. The reason teachers and administrators in public
schools and private schools are excited about tax credits is because
they play more of a leadership role in getting these dollars to the
children who need it the most.
Mr. SHADEGG. I just want to go over a couple of points you made
because I think it is important to understand. One, I emphasize the
fact that my wife, both of my sisters, and my niece are all public
school teachers. You made the point in your remarks that these dollars
can go by a donor to a public school. That is, I think, one of the
points that people have concern about. The other point, and people get
confused, when we talk about cost to the government, I just want to
make it clear that we understand this. As this system works, if you
give a dollar directly to an educational institution, be that a public
school in your neighborhood or a private school, or to an organization
that creates scholarships, I take it, for a public or a private school,
that dollar goes directly to that school and is used by that school.
When you say it only costs the government 50 cents, or it only
imposes a cost upon the government of half of that, what you are saying
is that it, as an inducement or a way to encourage taxpayers to engage
in this activity, the taxpayer's tax liability to the government goes
down by half of what they give. So you are actually doubling the amount
of money that goes to education, because they give $500, would be the
max, and they get a tax credit, that is, they can reduce their check at
the end of the year that they owe to the government by half of that. In
this case it is $250. So not only are these resources that can go to
public or private education without all the bureaucracy that you talked
about, but on top of that, it is double the money. To get a $250 tax
credit, reduction in your tax bill, you have to give $500. We are
essentially doubling the money going to education.
Mr. SCHAFFER. It is more than a win-win situation. Every dollar that
the government spends today or that every taxpayer spends today through
their Federal Government gets filtered through this bureaucratic
process. In doing so, every dollar does not make it to the child by the
time it gets down to the bottom of this filter. Only about 60 percent
of the money spent on education alone gets to the child. The education
tax credit does just the reverse. Rather than losing cash, which is
what the government does today with your education dollar, the
education tax credit actually doubles the money. The reason it does is
because of one fact, and, that is, Americans really are willing to
contribute their own cash to American schools and American education.
If we can make that investment a little sweeter by offering an
education tax credit, sure it still costs the government a little bit
in the end, not nearly as much as the bureaucratic process, but the
result is for every dollar the Federal Government spends through a tax
credit that we are proposing, $2 actually make it to a child.
So when we describe this idea to administrators and schools and
teachers and business leaders and people who are involved in the
education bureaucracy and have dealt with it for so many years, they
are genuinely excited about this.
{time} 2245
The people who are most excited about it are the groups represented
by the two figures on this chart; the taxpayers, who are tired of
seeing their money squandered in Washington and just through government
bureaucracy in general, and the others are actually these children. We
brought them here to Washington, who have been the beneficiaries of
state tax credit proposals and other scholarships throughout the
country, and it is a remarkable thing to see 10- and 12-year-old kids
testifying before Congress about how this model has changed their lives
and really opened up their futures to educational opportunities.
Mr. HOEKSTRA. The other people that really do get excited are the
school officials at the local level, because under the bureaucratic
model, the dollars that come from the Treasury come with strings
attached saying, ``you are getting a dollar and you will spend it this
way. And, as a matter of fact, we are going to monitor you to make sure
you spend it the way we want you to spend it. When we send you the
money, we are going to require you to report back to us that you spent
it exactly the way that we mandated that you do, and because we don't
really trust you, we will send in auditors on a periodic basis to audit
your reports, because we don't trust you are going to tell us exactly
the truth.'' So you get this whole bureaucracy in here that does
nothing, that totally does not consider the child.
With this model, local officials, they have got an accountability,
but they have only got it to the taxpayer, their local taxpayer, in
that they have to convince a local taxpayer that says, ``For our school
or district or our kids, this is what we want to do. Would you please
support us?'' And if the money comes in and they have made a compelling
case, it will come in.
That is what my colleague learned in Arizona, that when local school
districts make a compelling case that says we get this money from the
State and Washington, but our district is just a little bit different
and we have got some special needs, at that point people at the local
level will step up with the tax credit or the folks will step up and
write that extra check and these school officials can meet some very
specific needs for their school district, for their kids. They
recognize the accountability is not to some faceless bureaucrat in
Washington, D.C., but their accountability is to the kids, to the
parents of the kids, and to the local taxpayers; and that is exactly
where our schools need to have the primary focus, is back into their
communities.
Mr. SCHAFFER. We have some opponents to the plan, unfortunately, and
I think that opposition is somewhat premature. It is almost reflexive
because of the battles that have been traditional here in Washington.
When we talk about having a closer connection between taxpayer and
child, some people in this bureaucracy over here seem to be threatened
by that.
I just want to point out for those interested in preserving this
bureaucracy, that is not a goal of mine particularly, but I just want
to make it clear the tax credit proposal does not touch this
bureaucratic model. We are not messing with the Department of Education
laws or the bureaucracy in any way. We are changing the Tax Code, which
is different.
But this whole bureaucracy is going to continue to grow. If history
has shown us anything, it is that it does not matter who is in charge
of Washington, whether it is a Republican or Democrat, this bureaucracy
grows by massive proportions from year to year, and that is not
something to be proud
[[Page H3446]]
about or brag about from my standpoint as a conservative, but that is
the reality.
For those who believe that a tax credit means that there will be
fewer dollars spent in the traditional bureaucratic way in schools,
Arizona is a perfect example. Arizona passed a tax credit proposal
similar to what we are proposing here and the result was actually a
benefit to Arizona's public school finance law. What happened was the
per-pupil operating level actually increased in Arizona schools, and,
not only that, but the Arizona school finance laws continued on without
any change or any amendments to the way the school finance acts works
in Arizona.
I yield to the gentleman from Arizona to highlight that point,
perhaps, or anything else he would like to add.
Mr. SHADEGG. I would just like to drive home a couple of the points
the gentleman has made and make it very clear that what we are talking
about here is more resources for education.
It is kind of interesting, as the gentleman points out, in Arizona we
adopted a tax credit. The Arizona tax credit is different than our
proposal here in Washington, which is not a dollar for dollar match,
but rather a one for two match. If you give $2 to education, you get a
tax credit, that is to say in simple English, a reduction in your taxes
due, the amount of money you have to pay, of $1. That doubles the
amount of money going to education before you even factor in the loss
of whatever it is, 25 cents, 35 cents, in the bureaucracy, taking the
dollar that goes to Washington down to only 65 cents by the time it
gets back to the education system or to the child.
But on top of that, in Arizona, ours is a dollar for dollar. We did
not have the multiplier effect. I think the multiplier effect of the
proposal here is a very good one, because no one can say this will
divert resources from education, because by definition you have to give
twice as much in order to get the single deduction, that is, you give
$500, you get a tax credit of only $250. That means there is twice as
much money for education, and that is a true benefit.
In Arizona, as the gentleman pointed out, the experience has been
very positive; and it has encouraged, not discouraged, the funding of
education. It has been a boon. It has been good to watch people get
excited.
I think our colleague from Michigan pointed out that the
accountability is a huge factor. In Arizona, they created what is
called the Arizona School Choice Trust, which is a nonprofit charitable
organization which collects contributions from people all over the
State and then awards scholarships to low-income children trapped in
failing schools who want to get a good education and whose parents want
a good education for them.
I have known a number of people involved in that effort, and it is
very exciting to see the kind of, as the gentleman described, the
students who come to Washington, to see the excitement in the eyes of
the adults, some of them very wealthy, some of them very ordinary
means, who have decided to make this kind of contribution, give money
for a tax credit, and then see that money used usefully.
We are in a very competitive world. This is a different world than
perhaps our parents or grandparents faced, in that education now is
absolutely critical. We all know the stories about America falling
behind in education and the ongoing debate about we need more
resources.
In Arizona there is a very heated debate, do we not need to put more
money into education, more money into education? I am not one of those
who believes that money creates a direct link to success in education,
but it is true that we do need to pay teachers well, we need to be able
to give them the resources to do their jobs.
The gentleman mentioned the professionalism of educators. I am
obviously biased in my own view of my wife and two sisters and my
niece, but I find they are all intentionally dedicated, concerned
individuals. They give a great deal of money out of their own pocket.
They go out and buy supplies. My sisters go out and buy supplies for
their classrooms. My wife, to my chagrin, goes out forever and buys
supplies for her bulletin boards and candy to give away to the
kindergartners that she works with to provide rewards when they do well
in their performance. My niece in Tucson is a math teacher, and she
gets excited when she can help kids.
Giving those teachers the resources they need to educate young minds
and to make them be able to be competitive in this globally competitive
world we are entering is, I think, one of the greatest challenges we
face here as a Nation.
Doing it by the tax credit means, which lets people get personally
involved and say okay, I am going to write a check this year for $500.
I know I will only get a reduction in my taxes of $250, so I am giving
away an extra $250. But I care. I care about the education of kids in
general. Business owners care about getting educated workers to come
into the workforce.
I think this is an idea that kind of cuts around all of the
bureaucracy of other reforms that, as the gentleman pointed out
earlier, we might make in the overall system, that indeed the President
was trying to make with H.R. 1. He believed he hit upon something that
might make education more accountable.
Tax credits let individual people put their money where their mouth
is, so to speak, and do something to help educate the kids right in
their neighborhood and create a one-on-one relationship with the parent
or with the child or even with the school administrator and say hey, I
made a $500 contribution this year in Arizona. I gave it to your
school, I expect to see you make that money work. The administrators
that I have seen in Arizona are very excited about this program, and
they believe that they are being given a chance to manage these
resources.
I think it is a huge success, and I am very, very hopeful that we can
enact here in Washington a modest beginning of this program and get it
started across the Nation.
Mr. SCHAFFER. That kind of accountability that the gentleman just
described in Arizona is what we are trying to achieve throughout the
country. It is the accountability that goes from the recipient of
funds, public funds, to the one who donated those funds. Right now
school leaders have become proficient in the language of Federal
education bureaucracy. They know the language to use in order to get
the grants and satisfy the bureaucrats in Washington in order to get
the money to the school.
What we want to do is provide really an opportunity to try to reform
this whole education culture, so that the relationship goes right back
to the neighborhood. The gentleman is right, individuals when they
actually physically hand that check over to a school or hand that check
over to a scholarship fund are more inclined to follow up than people
here in Washington are.
Here is the bill right here. The other element that I think is very
attractive, and I just want to clarify this, is you do not have to have
a child in order to benefit from the tax credit under this proposal. As
long as you are paying taxes, you would be eligible to receive a tax
credit if you contribute to a scholarship fund for low-income children
to go to the school of their choice, or to an enrichment fund that
would be established by a traditional public school. But you do not
have to have children in order to be a part of this, to be part of your
community education and to be part of the accountability process that
goes along with that to create better schools.
Mr. SHADEGG. Every American taxpayer can participate.
Mr. SCHAFFER. Absolutely. I would just like to point out, when I say
that existing public school leaders are enthusiastic about the idea, I
brought proof with me tonight from Michigan. The Michigan School Board
Leaders Association sent us a letter just last week that says, ``Dear
Congressman Schaffer, the Michigan School Board Leaders Association
supports the proposed legislation allowing tax credits for
contributions for both private and public education expenses. This
legislation represents a win-win solution. It encourages more corporate
giving to public schools, while it also encourages corporate and
personal giving to organizations that assist low income children. Such
initiatives are essential given that the latest test results,'' this is
kind of a Federal benchmark, `` show that 63 percent of the low income
children essentially cannot read at the
[[Page H3447]]
fourth grade level. The Michigan School Board Leaders Association
applauds you in offering fair legislation which creates incentives for
investment in the future of America's children, regardless of whether
they attend school.''
This is signed by Lori Yakland, the executive director of the
Michigan School Board Leaders Association. So this is not something
that just appeals to private school leaders, but those that have been
involved at the leadership level and business level in trying to
promote quality public education in America. This addresses all
schools, the American education system. It does not discriminate, this
tax credit bill does not discriminate between government-owned
institutions and non-government institutions. Its focus is rather on
all children, all American children; and it treats them all equally.
Mr. HOEKSTRA. I think that is why, for a lot of our public school
folks, this is a very exciting proposal, because they only get about 7
percent of their money from Washington to begin with. A lot of that
money comes with the strings attached and very little flexibility, but
when they see this tax credit proposal, they see it as another avenue
to get money to come into their schools, because they are confident
that they have built the relationship with their constituents, with the
corporations back in their districts, with the parents and the
taxpayers in their district, that they have got confidence in their
local schools, and with this incentive we are providing through a tax
credit, they believe they can go into their community and raise the
funds necessary to do some of the special things that they would like
to do for their schools.
In a lot of places today, the State of Michigan, it is very difficult
for a school district to raise any extra money for operating expenses.
I guess it is next to impossible for them to raise operating money for
their schools. It all comes on a formula basis out of our State
capital.
So what they are saying is this is now a new revenue source for us.
They do see it is more money coming into their schools, because they
have got a high degree of confidence that the programs and the efforts
that they wanted to put in place will be supported by the people in
their local districts.
So it really is a good complement, one set of funds coming through
the bureaucracy, and another set of funds for their operating coming
directly from the taxpayers in their community. It creates a new
accountability stream, the one that I think they treasure the most,
which is their accountability, number one, to the kids, number two, to
the parents of those kids and their schools, and, thirdly, to their
communities, because a lot of our communities recognize that their
future depends on the quality of the education that their kids are
receiving today.
{time} 2300
Mr. SCHAFFER. Mr. Speaker, one other element I want to mention is
just a little bit about the strategy of bringing this bill to the point
we are at now. The school choice components of the Leave No Child
Behind bill, H.R. 1, which passed last year, were taken out by the
House and never really considered. So we went back to the President and
asked him, Mr. President, since the school choice provisions were not
part of H.R. 1, we want to continue on with that part of your vision,
this vision of leaving no child behind.
The President has committed to helping us with this tax credit
proposal. In fact, it is largely because of the discussions we started
on this a year ago that we have since secured commitments from our own
leaders here in the House: the Speaker, the majority leader, our
majority whip, and key committee chairs, to bring this proposal to the
floor. So I just want to commend our President for the promises he has
made to back the tax credit proposal that is about to be introduced
here in the House; and I want to commend the leadership of the House
for its commitment to bringing this bill to the floor and get a fair
markup in the Committee on Ways and Means and for the team effort that
has really led to what I think is just really perhaps the most exciting
prospect that we have for reforming American schools.
Mr. SHADEGG. Mr. Speaker, if the gentleman will yield, I would like
to begin by saying that the gentleman deserves a lot of credit, along
with the gentleman from Michigan (Mr. Hoekstra), having been in the
lead on this fight. You are both on the committee of jurisdiction, the
Committee on Education and the Workforce, and I think you have done a
great job on leading this issue.
Whenever we do these Special Orders, it sometimes occurs to me that
we sometimes may be talking around or over the heads or past the
listening audience. I thought maybe it would be worth just a couple of
minutes to explain some of the concepts here. I know that I get in
discussions where I use the words ``tax credit,'' or I use the word
``deduction,'' and people do not understand. I mean they do not want to
say, I do not understand what you mean, Congressman. But in America,
with the withholding structure that we have where both wages and taxes
are withheld out of your check, you file a form at the end of the year
and you get a check back from the government; I think a lot of people
do not really understand what a tax credit is and what a deduction is
and why there is such a critical difference.
I think it might be important to kind of walk through the fact of
what this would mean for, as the gentleman pointed out, any taxpayer in
America who even does not have a child; let us say they are used to
filing their tax return and they get a check back from the government
saying that they have overpaid their income taxes for the coming year.
Let us say they get a check back right now of $1,000 in a given year,
and that is because they owed everything else that they had paid in,
except that $1,000.
This is not a deduction that reduces the amount of money on which
they have to pay taxes; this is rather a reduction, a lowering, of the
dollars that they must pay in taxes themselves. So a tax credit means
they get, they actually get money back, whether their check refund is
larger or whether they write a smaller check to the government at the
end of the year; is that not correct?
Mr. SCHAFFER. Yes, sure, the gentleman has described it accurately.
Let us just use, for example, the base benefit amount that exists in
this proposal, which is $250. That would be the tax benefit to an
American taxpayer.
Mr. SHADEGG. So just to make clear, Mr. Speaker, a taxpayer decides,
once this bill is in place, I am going to give $500 to help low-income
children in my neighborhood or in my State. They give that $500 check.
Come the end of the year, they get either a refund check that is $250
larger or, if they owe money at the end of the year, they write a check
to the government that is $250 smaller.
Mr. SCHAFFER. Mr. Speaker, that is correct. Because without the bill,
as the law stands today, let us just assume Americans who pay taxes,
they will be forced to just pay that $250 to the Federal Government.
That is where that money will go without our bill.
What we are saying is that if you make a $500 contribution to a
school, to a school project or a scholarship fund, you take that $250
that you have given to a school and you no longer send that to
Washington. So you are going to pay that money to somebody anyway. What
we want to do is give you a choice. You can send the money to the
bureaucracy here in Washington, let it go through the political process
that we described here before, or you can add a little bit of your own
cash to it and take it to the school down the street, which is
reflected here on this chart. And you have effectively used the $250
that would have gone to the bureaucracy and instead, taken that, along
with another $250 of your own cash, and given it to the kid who needs
it.
Mr. SHADEGG. And, Mr. Speaker, of critical importance, for those who
say we are underfunding education at the Federal level already, we
should not be doing any of these schemes, we should not be diverting
dollars, we should not be reducing the amount of money that goes into
education. By using this device, by saying you get a $250 tax credit,
but only if you make a $500 contribution to education, that argument
goes away. Because we have not reduced the amount of money going to
education by $250; we have increased the amount of money going to
education by $250 that would not have been
[[Page H3448]]
there to begin with. And if $500 went to education, not $250, and in a
sense we know that out of the $250, only 65 cents out of each dollar
would get to the student, we have, as we said earlier, more than
doubled the amount of cash going into education, which is why teachers
across America, teachers' unions, school superintendents, school
administrators, people who are professionals and care about resources
for education ought to be excited about this idea.
Mr. SCHAFFER. They are, Mr. Speaker. And from a taxpayer standpoint,
most taxpayers are going to be excited about this, I think, especially
people who have children in schools and who are familiar with the
academic settings in America today.
Some Americans just do not care, and we know this, and that is
unfortunate, and some of our colleagues here in Congress do not care.
They will be content to continue sending cash to Washington as they
always have.
Mr. SHADEGG. As the only mechanism.
Mr. SCHAFFER. Yes, some will just do that, because it will be
simpler. Frankly and honestly, it will be easier just to continue
shoveling money to Washington, D.C. and letting us spend it here. But
for those who believe that getting more bang for the budget, who
believe that it is going to help more children, this tax credit really
speaks to them, and that is the partnership that we are trying to
create that just shows a better way. It does not threaten the
bureaucracy which I mentioned before, because there are enough people
that want to preserve that system that exists now. I hate to admit
that, but that is the cold, hard facts and realities of Washington,
D.C. But for those Americans who are taxpayers, who are parents, or who
work in public schools who want to see dollars getting directly to
children, this tax credit proposal offers them a unique option that
they do not have today. It is really, I just think, an important
element of new hope in American schools for children.
Mr. HOEKSTRA. Mr. Speaker, my colleague was talking about what is a
simpler process for the taxpayer. This is fairly simple to begin with,
but the gentleman is right. Having your taxes withheld every week makes
this a very attractive, or not attractive, but it is the process that
is there, and they have been doing it for years. But this process is
very, very difficult for our local school district. They have to clamor
with the State, they have to raise a ruckus with us to make sure that
they get their fair share, and then they have all the bureaucracy that
goes with it.
I mean when we are talking about what is the easiest and what is the
fairest method for kids and for local taxpayers, this is the posture
that clearly works. There is no bureaucracy, there is a lot of
flexibility with how the money is spent to make sure that at the end of
the day, what do we want? We want this American child to be the best
educated child in the world. It does not mean that we do not want other
kids and the rest of the world to be as educated as well as they are;
we do. But at the end of the day, this kid cannot come in fifth, tenth,
fifteenth, seventeenth, nineteenth like they are on some of the tests
today on math and science and those types of things.
Our goal and our objective is to have ours to be the best educated
kids in the world. We want to make sure that every child has an
opportunity for a great education; that we cannot have 60 percent of
our kids getting a good education, we want all of our kids to get a
good education.
We want all of our kids to be in safe and drug-free schools. As one
of my friends said, the only thing we want our kids to be afraid of
when they go to school is the exam tomorrow afternoon, that is it; not
fearful of walking from the classroom to the locker to the lunch room
or anything like that.
So we have a great vision for education. This really empowers
taxpayers at the local level to help build that vision into a reality
at the local level.
Mr. SHADEGG. Mr. Speaker, the ``leave no child behind'' phrase is
such a great one, because every American believes in that. No American
wants to leave a child behind, and it is a great way to point out what
we want to do as a country for our children.
{time} 2310
But I just want to point out that as a necessary corollary to what
the gentleman was saying just a moment ago, the only reason that one
would oppose tax credits would be either that one wants to retain the
bureaucratic control in Washington, D.C., to be able to order those
districts around, or wants fewer dollars to go to education. I just
want to make that clear, because I think people are out there debating,
who is opposing this and why? I think it is important to understand
that.
Given that under this structure we leave the existing structure in
place, and it still gets the resources that are directed to it, the
Federal dollars to education that are flowing through the Department of
Education are still there, and they still go out with all the strings
and all the bureaucracy.
This is not in place of that, this is an add-on in addition to that.
The SPEAKER pro tempore (Mr. Keller). Under the Speaker's announced
policy of January 3, 2001, the gentleman from Colorado (Mr. Schaffer)
is recognized for the remainder of the hour, or approximately 10
minutes.
Mr. SCHAFFER. Mr. Speaker, I yield to the gentleman from Arizona (Mr.
Shadegg).
Mr. SHADEGG. Mr. Speaker, to continue the point, this tax credit
proposal is on top of the existing Federal funding for education. It is
more dollars without the control.
So I thought the gentleman did such a good job of making that point,
that these are extra dollars and they go without the control; that the
only reason one could oppose it would be if one is a bureaucrat in
Washington, D.C. and does not want Federal money of any kind going out
to educate kids without those Federal dollars being controlled, and the
control of them, and the dictate, saying they must spend it this way,
coming from Washington, D.C.
It seems to me, given that, that one has to either oppose additional
funding for education or genuinely believe that the people back home in
the local schools and school districts cannot spend the money unless
they are told precisely how it must be spent by Federal bureaucrats.
Unless one believes one of those two things, one ought to be
supporting this kind of idea, because it means more dollars for
education, more local control, it means more involvement by Americans
in the funding of education in a very direct sense, where they want the
accountability to them and they get the satisfaction of knowing their
money is helping education.
It is, as the gentleman says, a win-win proposal.
Mr. SCHAFFER. And it matters to American students. I brought a couple
of copies of the testimony that occurred in Colorado. My State
considered a tax credit proposal, and I regret to say it failed really
by one vote in our Colorado State senate just a few weeks ago.
But there was a student, Sasha Ward, 11 years old, who testified
before the State legislature again on similar legislation. This is a
child who did receive a scholarship and was really speaking to the
importance of making scholarship funds available to more children in
Sasha's situation, and stressing to the State legislature that that
would be possible, that would be achieved, through the kind of tax
credit proposal we are proposing here, similar to the one that was
being considered in Colorado.
Here is what the 11-year-old said: ``My family applied for an ACE
scholarship for me to be able to study at the school that I consider a
very special place. It is special because it is where I learn the most
and where I enjoy learning. It is a place where I can dream and have
that feeling that I am going to be successful in my life, successful
because of what I am learning right now. In the past, my mom tried to
put me in a Catholic school, but she could not afford the tuition for
very long. Now I am on my second year in the same school because of
these scholarships that she has got for my sisters and me. I will be
very happy if I can stay at my school and have the same good school as
long as possible. They are special, too.''
That was testimony from someone named Sasha Ward, an 11-year-old from
Wheat Ridge, Colorado. The State legislature also received testimony
from Maureen Lord. Maureen is a supervisor of a child who initially was
designated as learning-disabled.
[[Page H3449]]
The supervisor here says to our legislature: ``Joe Ray was designated
learning-disabled in the local public school. At the end of his fifth
grade year, he was reading between second and third grade level. He
hated writing anything. His distraction level was extremely high; and
to complicate things even more, he had some fine-motor problems.
``Being an elementary educator myself, I knew Joe Ray would never be
at grade level if he continued in a school system where he had only
received an hour of special attention during each day. His future
looked dismal and accomplishing the basic skills he needed to go on to
middle school and high school seemed remote.''
The teacher goes on that one day she heard an advertisement on the
radio about the scholarships, and a school that appealed to children
similar to Joe Ray, and so this teacher began the application process
to try to get one of these scholarships, and succeeded. Here is what
happened.
The teacher goes on: ``Joe Ray applied for the ACE scholarship and
received a 4-year partial scholarship to a private school. With help
from his mentor and his mentor's supervisors, the obstacles were
falling one by one. Let me tell you more miracles. Joe Ray aced last
semester's report card. His teacher says he is a wonderful young man to
work with, an eager learner. The multisensory math program is helping
him to remember his times tables, and his confidence is growing. He now
frequently looks you in the eye when he talks to you. This is just one
young boy who is benefiting from the investments that scholarships have
made to his future. I hope this encourages some of you.''
Again, testimony like that is the kind of testimony we are just
collecting every day from people around the country who realize the
power and the value of finding a way to create a massive cash infusion
in America's education system in a way that benefits children in public
schools and private schools, and those who perhaps want to move from
one category to another.
The system we have today is a discriminatory one, and it is
unfortunate to have to say that, but the reality is, it does
discriminate. It discriminates; it gives a tremendous amount of favor
to those children who make the kinds of decisions or the parents of
these children that make the kinds of decisions that meet the
satisfaction of people who work in government.
What we are saying is, no, the people in government, they are nice,
we care about them, but we want to make children the top priority. That
is what the education tax credit does. It starts putting kids like Joe
Ray and kids like Sasha Ward in the driver's seat, makes them the top
priority, and really forces in the end I think a reformation of the
education process, so all of those involved in the education system
start serving children, rather than just counting them as numbers to
drive dollars through a school finance formula.
Mr. SHADEGG. I think the gentleman said it well. The key is, this is
not a replacement for the current system. People in the current system
and believers in it should not feel threatened by it. What it is, is a
chance to add resources to the current system. It is a chance to make
it even stronger. It is a chance to put more dollars behind education.
It is a chance to get people more involved in the education of their
children. It is a chance to get around the bureaucracy and have the
accountability run directly to people in their own neighborhoods.
It is indeed for that reason I think a win-win that should not
threaten the education establishment and should encourage them. So I
compliment the gentleman and my colleague from Michigan for their very
hard work on this project.
Mr. SCHAFFER. I thank the gentleman. I am grateful for my two
colleagues for joining me here on the floor for this Special Order.
This is a topic we feel very strongly about. We will be back week after
week to continue talking about children and education tax credits and
the necessity to get this proposal passed to help these children.
____________________