Re: Tax-Credit Vouchers

by David French

Robert, there are two fairly short and simple answers to your tax-credit hypothetical. First, I would far prefer tax credits for donations to charitable causes than I would the standard tax deduction. Tax credits would energize giving to private charities (which tend to do their jobs far better and more efficiently than public entities), more efficient care providers would prosper, private choices would rule over government impositions, and my tax burden would decrease. What’s not to like?  

Second, I know you’re being deliberately extreme in your hypothetical (imagining Planned Parenthood as the sole beneficiary of a tax-credit regime), but one of the reasons that organizations like Planned Parenthood so zealously defend their public funding is precisely because they know they would have extreme difficulty generating the same kind of revenue through private choices. It knows that any kind of realistic health-care tax-credit scheme would involve a broad range of donation options (just as the Arizona plan allows people to donate to secular and religious tuition organizations), and the proven givers in our society (the more conservative and religious) are hardly likely to select Planned Parenthood for their tax-credit-fueled donation.

You also asked whether the Supreme Court’s ruling forecloses any challenge to a tax credit scheme that benefits, say, a particular church. Certainly not. The Court’s ruling simply establishes the commonsense notion that since a taxpayer cannot show any individual injury as a result Arizona’s tax-credit policy, they don’t have standing to sue. If, by contrast, Arizona’s plan allowed a person to create a religious tuition organization but not a secular tuition organization, the frustrated founders of a potential secular organization would almost certainly have standing to sue. 

Tax credits have been used for some time to incentivize private choices — for example, we have child tax credits, adoption tax credits, and various tax credits related to “green” energy — and some are better than others. While I’d prefer a world with less comprehensive government, lower tax rates across the board, and less social engineering through the tax code, that world does not (yet) exist. Given the political realities of our time, I think Arizona’s plan is excellent and a much better use of credits than, say, bribing me to give up my Nissan Titan for a Chevy Volt.

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