I'm thinking about House Bill 1173, a proposal to give property tax credits to folks educating their kids at home or in private school. The mostly Republican bill currently awaits a hearing in House Taxation.
Public Education: A Civic Investment
Mr. Ehrisman has noted the main reason to oppose HB 1173: public education is not a fee-for-service business. Public education serves all of us by making available to every child a free education adequate for making that child into a useful worker and responsible citizen. Whether or not we have children in public school, we all in invest in a system that recognizes and supports everyone's right to economic and democratic opportunity.
Compare what HB 1173 proposes to other government services. You don't get a tax credit from your local fire department for not having a fire on your property. You don't get a tax break from the county for buying an AK-47 to scare trespassers off your land instead of calling the sheriff (uh oh... now I'm giving people ideas). You don't get a refund on your contractor's excise tax just because you don't apply for an economic development grant to expand your business. You pay your taxes for government functions to benefit everyone, not just yourself. That communitarian thinking applies to fire departments, police protection, economic development, and public education.
Republicans Throwing Money at Education without Accountability
Folks who find value in community should take issue with HB 1173... but so should Republicans. Regularly when I propose increased funding for public education to raise teacher salaries, hire more teachers, or buy more resources to help us educate kids, my Republican interlocutors say throwing money at education doesn't make education better. They demand we tie any extra education funding to extra work and measurable outcomes.
But what accountability does HB 1173 demand for educational outcomes? None. There's fiscal accountability: property owners applying for the tax credit have to prove to the county and/or school (and/or... more on that in a moment) they spent money on "eligible education expenses." But there's no educational accountability. You could buy a bunch of books and use them for doorstops, or buy a couple iPads and use them for nothing but Angry Birds and porn, and you'd still get your HB 1173 property tax credit. HB 1173 throws money at education without even trying to ensure results.
How Not to Write Legislation: Logistics
Finally killing off HB 1173 are three major flaws in its wording. First, consider Section 3, the application and verification section:
Section 3. To apply for a property tax credit pursuant to this Act, a property owner shall, prior to January first, submit an application to the county director of equalization stating that the person is the owner of the property and stating the name and school enrollment information for any child for whom the property owner has incurred eligible education expenses. The application shall be on a form prescribed by the Department of Education and shall be verified by the school in which each child is enrolled. On the application, the property owner shall list each eligible education expense the owner has incurred and the cost of each. The property owner shall sign the application under penalty of perjury and provide documentation to substantiate each expense listed.
The tax credit application is supposed to be filed with the county but verified "by the school in which each child is enrolled." The applicant must provide "documentation to substantiate each expense listed." So which agency exactly is charged with verifying these expenses, the county or the school? Whichever it is, does that mean homeschoolers and private schools will receive under HB 1173 visits from county or school district inspectors who will riffle through their desks and bookshelves looking for the items on submitted receipts? With this vague wording, HB 1173 appears to open folks seeking government subsidy for alternative instruction to visits from a government that they are trying to keep at arm's length.
How Not to Write Legislation II: Cash Back!
The second textual flaw is the lack of clarity on the limits of the tax credit. Check out Section 2:
Section 2. The amount of the property tax credit received by any property owner in any year may not exceed the total amount of school district taxes owed to that school district by the owner for that year. In addition, the total amount of property tax credits received by an individual property owner or by multiple property owners pursuant to this Act for incurred eligible education expenses for any individual child in any year may not exceed eighty percent of the current year's per student allocation in the general state aid to education formula as defined in subdivision 13-13-10.1(4).
The intent appears to be to cap the credits at 80% of what we spend on an individual child, suggesting that HB 1173's sponsors want everyone to keep some skin in public education. But read Section 2 closely. The credit is capped at 80% of the state's per-student allocation. Currently, that's $4,389.95. 80% of that is $3,511.96. The Madison Central School District currently receives $1,226.72 from me each year, over two-thirds of my property tax. Pass HB 1173, and if I homeschool my daughter, I could get a tax credit that would erase not just this year's investment in Madison but my tax bill for almost three years. If homeschool my little one for the rest of her pre-university learning, HB 1173 could help me rack up enough tax credits to erase my school tax on my Lake Herman headquarters until after I retire.
Nothing in Section 2 clearly limits the total tax credit, only the limit granted for "any individual child." That tells me that if I have more kids, I can claim a tax credit for each child for whom I buy private-school tuition or textbooks. So my future fecundity becomes a fiscal fright for my friends at Madison Central.
How Not to Write Legislation III: This Madrassa Brought to You by the State of South Dakota
The third foul-up (or maybe this is a deliberate trick) in the wording of HB 1173 lies in the definition of who can qualify for these credits. You'd think the tax credit is for parents, right? Wrong. The bill doesn't say the word parent. HB 1173 consistently refers to "any" property owner who incurs eligible education expenses for "any child." So if I get a wild hair and decide to pay the tuition for all the kids at the Spearfish Classical Christian School, even though none of those kids are mine, I get the tax credit. If I buy iPads this year for all the seniors at O'Gorman to read the South Dakota blogosphere as core curriculum for a social media and government class, I write off my school property tax until I die.
I'm not even sure HB 1173 limits the tax credits to expenses for South Dakota kids. Check out Section 1:
Section 1. Any owner of property that is subject to taxation pursuant to chapter 10-4 may receive a property tax credit to be applied toward any property tax levied on the property for the school district in which the property is located. The reduction is based on education expenses the owner has incurred for any child who meets the following qualifications:
- The child is at least five years old, but not older than eighteen years; and
- The child is a kindergarten through twelfth grade student enrolled in a nonpublic school or the child is receiving alternative instruction pursuant to § 13-27-3.
Incurred, eligible education expenses for which a property tax credit may be received pursuant to this Act include tuition and school fees for any child enrolled in a nonpublic school, and the purchase of curriculum and other necessary educational materials and resources.
The child has to be between 5 and 18 and enrolled in a non-public school. The property owner just has to own property subject to tax in South Dakota. A well-landed South Dakota donor could write checks to cover some of the tuition for every child at Sidwell Friends School in Washington, D.C., and shift that cost to South Dakota's taxpayers. I could pour my money into an oppressive Indian madrassa and, under a strict reading of the text prime sponsor Rep. Don Kopp (R-35/Rapid City) wants to write into South Dakota law, get thousands of dollars in tax credits. Holy cow—HB 1173 out-Jindal's Bobby Jindal! (Don Kopp never has paid much attention to detail when writing legislation.)
HB1173 is bad legislation philosophically and textually. Pick community spirit over selfishness, shared responsibility over sloppy (or sneaky) policy. House Taxation, when you get around to this bill, please give it the 41st-day treatment fast.