[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.

                          ____________________