A bill introduced in Congress would create an unprecedented 100% tax credit for donations to nonprofits that give out private K-12 school vouchers and create a lucrative tax shelter that would further enrich some of America’s wealthiest individuals. If passed, the Educational Choice for Children Act of 2025 (ECCA) would cost $136.3 billion in revenue over the next decade, according to an analysis released today by the Institute on Taxation and Economic Policy.
“This is indefensible tax policy, and wasteful to the core,” said Carl Davis, research director at ITEP and author of the report. “If this bill were enacted, opportunists would flock to use this profitable tax shelter regardless of whether they had any actual interest in supporting private K-12 school vouchers. That’s the inevitable result of the government agreeing to pay out $136 billion in tax cuts in return for $126 billion of contributions to voucher funds. This is an egregious attempt to harness wealthy families’ interest in tax avoidance and personal profit as a means of driving interest in a cause that remains unpopular with the public.”
Other key findings:
- The 100% tax credit under this bill is a sharp departure from how the federal government treats most types of contributions to nonprofits. Typically, people contributing to nonprofits that support wounded veterans, survivors of domestic violence, victims of natural disasters, or other nonprofit endeavors receive, at most, a tax deduction valued at 37% of their contribution.
- Of the $136.3 billion in lost revenue over the next decade, $134 billion would be federal revenue and $2.3 billion would be spread across the states. The analysis has state-by-state numbers to show the local impact. California stands to lose the most over the decade ($877 million), followed by New York ($431 million), Massachusetts ($146 million), New Jersey ($103 million), and Illinois ($79 million).
- The money would flow from the public to three main groups of beneficiaries: private schools would receive 85% ($115.7 billion), voucher-bundling organizations would receive 7% ($10.1 billion), and wealthy donors would receive 8% ($10.5 billion) as personal profit.
- The personal profit element is enabled by the legislation allowing donors to give corporate stock and avoid capital gains taxes. ECCA’s supporters appear to be counting on this tax shelter as a means of driving donor interest in the program among wealthy investors.
- The nation’s wealthiest families would enjoy substantial tax avoidance opportunities under ECCA. For example, if ECCA had been in effect a few years ago, voucher-proponents Betsy DeVos and Jeffrey Yass would likely have claimed annual tax credits of $11.2 million and $130 million per year, respectively. Capital gains tax avoidance would have come on top of these tax credits and could be expected to result in roughly $1.4 million of annual profit for DeVos and $13.3 million of annual profit for Yass.
The Educational Choice for Children Act of 2025 has been introduced in the U.S. House of Representatives as H.R. 833 and in the U.S. Senate as S. 292. In the House it is sponsored by Rep. Adrian Smith and is currently co-sponsored by 51 Republican members of the House. In the Senate it is sponsored by Sen. Bill Cassidy and is currently co-sponsored by 32 Republican Senators. During the last Congress, the legislation was advanced out of the House Ways & Means Committee on a party-line vote; lawmakers on that committee also explicitly voted against an amendment that would have stripped the tax shelter provision from the bill.
This content originally appeared on Common Dreams and was authored by Newswire Editor.