Vouchers as Tax Credits Fail to Deliver on School Choice Promise

School choice is back in the spotlight with the Supreme Court’s recent decision not to rule on the case of a religious charter school in Oklahoma, which left in place that state’s highest court ruling that funding such schools violated the constitutional separation of church and state. The court divided 4-4 after Justice Amy Coney Barrett recused herself from the case.

This issue will come up again, when the right case is brought before the court. President Donald Trump, now a central voice in Republican educational policy, is pushing to expand voucher programs nationwide. School choice, he argues, empowers parents, enhances competition, and elevates opportunity.

The appeal is clear—and for some, compelling. But buried beneath the ideological enthusiasm is a practical and legal quagmire: the mechanics of how government-funded school choice would work, which matter deeply.

I favor school choice and fair government funding of private and parochial education per student as an alternative to public school. But vouchers—the system under consideration by the federal government—is the least effective funding mechanism.

Tax credits or vouchers, for all their legal ingenuity, are a poor mechanism to fund the promise of school choice. While they were the only mechanism for religious schools for many years, this is no longer the case. They are a legacy of constitutional constraints that no longer bind, and a policy mechanism that frankly never worked well.

If the goal is to empower families, then states should stop hiding behind convoluted tax structures and fund school choice the way we fund any private program that provides a public good: directly, transparently, and with equity in mind.

As I argued in a recent academic work, the problem isn’t with school choice itself—though one could have principled debates about its broader merits. The real issue lies with how states fund private educational choices.

Many states already use tuition tax credits—which allow parents to deduct from the money they owe the state in taxes their contribution to the private or parochial school of their choice— and a federal system is being considered by Congress. But tax credits are both inefficient and inequitable.

And now that constitutional barriers to direct funding have largely been removed, there is no excuse to cling to these outdated mechanisms. If we want to fund these schools, we should do so with direct public funding of both private secular and parochial schools per student enrolled.

For decades, tax credit schemes were a clever workaround. States could incentivize private donations to scholarship organizations that, in turn, funded private—and often religious—school tuition. Because the state never “touched” the money, they argued, the Establishment Clause remained unoffended. Courts accepted that argument.

But this structure came at a steep cost. The result was a cumbersome system that looked and functioned like direct government subsidies, but without the accountability that typically accompanies government funding.

States such as Georgia and Arizona allowed taxpayers to “redirect” their tax dollars toward specific private schools, effectively laundering public money through private hands. Oversight became nearly impossible given this indirect mechanism and fraud flourished. And the families most in need—those for whom school choice was ostensibly designed to help—were often left behind.

Recent US Supreme Court rulings have rendered this constitutional caution obsolete. In Carson v. Makin (2022) and Espinoza v. Montana Department of Revenue (2020), the high court held that once a state funds private education, it can’t exclude religious schools. It also clarified that direct funding isn’t only constitutional but, in some cases, constitutionally required.

States can—and in some cases must—fund religious schools if they are funding secular ones. State government can directly fund private schools of any stripe, and if they fund any private schools, they must fund religious schools.

With these constitutional concerns swept aside, the tax credit model loses its sole remaining justification. And when judged on the merits, it is the least desirable method of funding.

Tax credit systems are regressive. Because they rely on donors receiving dollar-for-dollar reductions in their tax liability, they disproportionately benefit wealthier individuals—those with sufficient tax burdens to make large donations.

Poorer families, who can’t afford private tuition or large upfront costs, find themselves excluded. Meanwhile, the state loses revenue—sometimes hundreds of millions of dollars—that could have been directed more equitably through traditional public education or properly designed voucher systems for private and religious schools to those who need such aid.

Moreover, tax credit programs are structurally opaque. Scholarship organizations, the intermediaries in this scheme, operate with minimal oversight in many states. In some jurisdictions, donors can designate which schools—or even which students—should receive their “gift,” creating fertile ground for favoritism and misuse. In an era of heightened concern over educational equity and transparency, such shadow financing should be unacceptable.

The alternative is both simpler and better: Direct public funding of all schools per student. Properly structured, a voucher or education savings account program can offer families real choices, while maintaining public accountability, which ought to be the twin goals.

These funds can be needs-tested, equitably distributed, and tracked as each state directs. States can ensure that participating schools meet certain educational and safety standards, and that the public’s money is being spent in service of the public good.

Of course, critics will worry that direct funding of religious schools compromises the wall of separation between church and state. But the legal landscape has shifted. As the Supreme Court has clarified, public money can follow the student—even into religious settings—so long as the program is neutral, and the choice is private.

The real danger isn’t constitutional, but political: that poorly structured programs will benefit the wealthy, erode public education, and reproduce inequality. The goal has to be to produce a better system than public education and not an equally ineffective system that doesn’t help the neediest.

School choice doesn’t have to be zero-sum. Done well, it can expand opportunity without undermining public schools; indeed, competition will make everyone better. But to do so, states must be honest about their goals. Are they trying to give low-income families access to better educational outcomes? Do they want to provide access to parental choice for all?

The difference lies not just in aspiration, but in execution. Direct funding is a better model no matter what the goal.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Michael Broyde is a law professor at Emory University, the Berman Projects director in the Emory Center for the Study of Law and Religion, and the director of the SJD program.

Write for Us: Author Guidelines