New federal legislation in 2027 opens the door for taxpayers to transform student lives
By George Valadie
Dangit!! I was sure we would win!!
So, it’s another Sunday morning in the Valadie house. Getting ready for Mass, bagels, and Diet Coke, catching up on overnight news and west coast scores, and then lastly—and sadly—tossing out last night’s losing lottery tickets and the dreams that always come with them.
I mean I was really sure we were gonna win this time. I just knew it in my soul. Haven’t you ever felt that way? Though I don’t know why. Officially, they say the odds are 1 in 292,202,338.
Someone once described it this way: If you laid 292 million playing cards end-to-end, they would stretch from New York City to Sydney, Australia. Get in your car, drive along that path, and somewhere along the way stop and pick up the one and only winning card along those 16,000 miles.
Those are your chances.
In spite of that realization, I always make the same mistake. I’m fine losing my $2. Here in Tennessee, these dollars go to public education, a worthy cause if there is one. But every time I buy a ticket, I make the blunder of allowing myself to dream.
If only … though I’m actually good with the stuff of our lives. I love our house and wouldn’t move. My car runs just fine, even has new tires. I guess I could use a few new T-shirts, and my golf glove has a hole in it. But other than that my closet meets my needs. Should I splurge with my windfall, it would probably be to travel to a few more Fighting Irish football games in South Bend, Ind.
But mostly I find myself conjuring up a list of the people and places to whom I would love to pay a really fun visit. My other dream is to die without a single penny left to give away.
Given my career in Catholic schools, each and every one at which I have worked or attended would be a huge beneficiary. But alas, their dreams went into my garbage can, too.
But here’s the thing—miracles do indeed happen. And this one is huge! As this school year begins, public, private, and parochial schools across this country have all hit the lottery. All of them.
And they don’t have to beat any odds. They just need our help. Free help at that.
Turns out we are their miracle.
Because beginning in January, our Congress has approved the federal Education Freedom Tax Credit program. As a result, every individual in the United States who pays federal income tax will be allowed to transfer some of those tax dollars (up to $1,700) to the school of their choice and in turn receive a dollar-for-dollar tax credit.
Not a deduction but a credit. Give a dollar, get a dollar.
There are details. There are always details. But in a nutshell, (and who doesn’t like to get all your info in a nutshell) here are our two choices: We can either pay our federal income tax dollars to the IRS or we can give them to the school of our choice.
We won’t be out a single extra dime. It’s like giving away Christmas presents without having to buy them.
We are their lottery.
“I don’t get it,” you say. Then you’re with the great majority since this doesn’t really go into effect until January. There is much education to be done.
“Surely there’s more to it though, right? Can it really be that easy?”
The answers are “Yes” and “Yes.” The federal government is involved so there’s absolutely “more to it.” But yes, it really is that easy.
Let’s break it down:
- Though passed by both House and Senate in Washington, D.C., each state’s governor can decide if they wish to participate (Tennessee has chosen to do so).
- The purpose of this law is to assist income-qualified students with school-related expenses ranging from tuition to computers to tutoring, regardless of the sort of school they attend.
- You and I and all individual income taxpayers (no corporations allowed) can restrict some of our dollars to a specific school, but to access the credit being offered we cannot give to them directly. Instead, the dollars must first be given to a Scholarship Granting Organization (SGO).
- These SGOs are 501(c)(3) charitable organizations bound to follow very specific restrictions imposed by the IRS. There will be several within our state, and our Diocese of Knoxville schools will partner with one of them.
- School families can apply for assistance to the SGO (with the help of their school).
- The SGO has the responsibility of verifying the applicant does indeed qualify for aid.
- The monies we give to the SGO are then divided among the qualified students and ultimately end up at their school on their behalf.
- Lastly, the SGO is accountable to the IRS so you can claim your tax credit when you file your income taxes.
I don’t know about you but our family’s history with the IRS has been hit-and-miss. Some years we owe, some years we get a refund. Your story may be the same.
But no matter which, by taking advantage of this new opportunity we will now either get a bigger refund or we’ll owe less while the schools and students get a boost as well.
“If the max I can get is a $1,700 tax credit, how is this going to help schools in any significant way? Hardly seems ‘miraculous.’”
I had the same question until the math did its thing.
In Tennessee alone, there are some estimated 2.1 million taxpayers, each of whom pays the federal government $1,700 or more in income tax. If each of us transferred just $1,700 of our tax bill to the school of our choice, we would generate $3.5 billion. That’s billion with a B.
On a national scale, the potential reaches $187 billion. Think 100 lottery jackpots.
What’s the math within our diocese? A pretty close guess estimates there are about 62,000 adult parishioners in our diocese.
If each made this same decision, picked a school, donated $1,700, the net result would yield $102 million. Imagine how that might change education?
And by extension, imagine how that might change the Church.
And again—this new law says you can give it to a school or you can pay it to the government. But if you choose a school, the IRS will reduce your tax bill by the same amount.
And when was the last time they told you that?
Tennessee residents are now familiar with vouchers. Those have become a political hot-button issue. No matter which side of the aisle you support in that regard, this new law is not that.
The federal government will not be sending any money to schools or students. It’s the taxpayers who will make these contributions; the government merely encourages it with a dollar-for-dollar matching tax credit.
“It all sounds too good to be true!”
I’m no tax accountant and would never pretend to give advice in this realm. “Consult your professional” as they say. But I know enough to say—it really is true and it really is that good.
When the gathered multitudes were hungry at day’s end, the Apostles told Jesus He should send them home. His response: “There is no need for them to go away; give them food yourselves.”
You do it. You feed them. Yourselves.
We know what happened after that. God always multiplies our good works. He’s just waiting on one to get things going.
Make a gift. Tell a friend. Take advantage. You’ll both get a tax credit. But the multiplied miracle will be what happens after that.
Dear God—Thank you for the chance to join hands with others. For others. Please do your thing and multiply our few loaves. Amen.
(Note: For more information on how to take advantage of this new Education Freedom Tax Credit legislation, contact your local school.)
George Valadie is the recently retired superintendent of schools for the Diocese of Knoxville and former president of Notre Dame High School in Chattanooga. He and his wife, Nancy, are members of St. Stephen Parish and reside in Chattanooga.