The Big Beautiful Bill uses rich people as conduits to fund religious schools and vouchers and likely provides the kids of the rich with free private education.
Big Beautiful Bill uses tax credits for the rich.
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Summary
The recent Big Beautiful Bill legislation includes provisions that enable wealthy Americans to exploit scholarship-granting organizations (SGOs) to avoid capital gains taxes while funding private religious schools. The bill caps the tax credit at $5 billion through 2029, utilizing the tax code and SGOs, as most voucher students attend religious schools, for which federal law prohibits direct government funding. This mechanism allows affluent donors to donate appreciated assets to SGOs, receive dollar-for-dollar tax credits, and effectively transfer the cost of private education to taxpayers while maintaining their wealth.
- Dollar-for-Dollar Tax Credits: The plan grants donors to scholarship organizations a tax credit equal to the amount they contribute. Unlike traditional tax deductions, these credits provide full reimbursement for donations to SGOs.
- Capital Gains Avoidance: Private school voucher donors who contribute corporate stock would avoid capital gains tax, resulting in a loss of revenue to the federal government. Wealthy individuals can donate appreciated securities instead of cash, eliminating their tax liability on investment gains.
- Massive Federal Commitment: States offered generous tax credits to corporations and individuals who donated to nonprofit “scholarship-granting organizations,” which then used donations to give scholarships or vouchers for private schools. The federal program expands this model nationwide.
- Religious School Funding: The rapid expansion of state voucher programs follows court decisions that have eroded the separation between church and state. These programs primarily benefit religious institutions previously barred from direct government funding.
- Minimal Oversight: The ECCA delegates accountability to the SGOs, who are responsible for verifying and granting the use of scholarship dollars. These SGOs are certified by the US Treasury and IRS and are subject to an independent audit. This creates opportunities for abuse with limited federal oversight.
This legislation represents a sophisticated wealth transfer mechanism disguised as educational reform. The tax credit structure allows affluent Americans to maintain their fortunes while taxpayers subsidize their children’s private education. The provision particularly benefits the ultra-wealthy who hold substantial appreciated assets, creating a regressive system where middle-class taxpayers fund elite private schools they cannot afford for their children.
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