Budget & Tax , Education

Curtis Shelton | July 16, 2019

Scholarship tax credit accounts for a tiny fraction of Oklahoma’s total tax credits

Curtis Shelton

Oklahoma offers many tax credits, but none have received the kind of attention over the last few years as the tax credit associated with the Oklahoma Equal Opportunity Education Scholarship program. There have been multiple legislative attempts to raise the current cap on the awarded credits from where it sits at $5 million. These attempts were met with tremendous opposition from the education establishment, especially from the Oklahoma Education Association, the state’s largest public union.

One argument against the tax-credit scholarship program is that the tax credits would take money away from public education. The way the tax credit works is that individuals and businesses receive a 50 percent credit (75 percent if a two-year commitment is made) for contributions made to nonprofit scholarship-granting organizations. These credits reduce the amount of income tax paid by those who donated, in turn reducing the amount of revenue received by the general revenue fund. Whether or not this reduced revenue for the General Revenue Fund would lead to less funding for education is unclear. As for the state budget as a whole, a study by economists at Oklahoma City University has shown the scholarship program actually saves the state money. 

However, state finances appear to have little to do with the real reason for opposition to the scholarship tax credit. After all, the Oklahoma Tax Commission lists 43 income tax credits on its 2017-2018 Tax Expenditure Report (though only 30 of those awarded any tax credits, totaling $267 million). The Oklahoma Equal Opportunity Scholarship tax credit amounted to $3.3 million—or 1.2 percent of the total amount of tax credits awarded. And yet as OCPA has reported (“Scholarship critics notably silent on millions in tax credits”), it’s only the scholarship tax credit—not the aerospace credit, the clean-burning motor vehicles credit, the coal production credit, or others—which draws opposition for allegedly “diverting money from public education.” 

The purpose of offering a tax credit is to encourage behavior beneficial to Oklahoma. Scholarships to schools like The Cross Christian Academy and Positive Tomorrows have helped students who were struggling in the traditional school system and had nowhere else to go. It’s small wonder that polling conducted this year by WPA Intelligence found that 60 percent of Oklahomans support raising the cap on this scholarship program, while only 23 percent are opposed.

Curtis Shelton Policy Research Fellow

Curtis Shelton

Policy Research Fellow

Curtis Shelton currently serves as a policy research fellow for OCPA with a focus on fiscal policy. Curtis graduated Oklahoma State University in 2016 with a Bachelors of Arts in Finance. Previously, he served as a summer intern at OCPA and spent time as a staff accountant for Sutherland Global Services.

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