There are certain topics that always seem to lead to heated debates. Religion, politics, taxes, and education often come to the forefront of these discussions. That is why the enactment of scholarship tax credits can be so contentious in both state governments and the news. By combining multiple hot button issues these credits ensure that there is never a dull moment, something that Maryland and South Dakota are coming to realize as they jump into the scholarship tax credit fray.
Mechanically, scholarship tax credits generally provide taxpayers a credit for making donations to third-party scholarship granting organizations, who then use those donations to award scholarships to students attending private secular or religious schools.
Maryland S.B. 706, creating a scholarship tax credit, recently passed the Maryland Senate as reported by Kathy Lundy in Bloomberg BNA’s Weekly State Tax Report. This bill represents the latest attempt for enacting a scholarship tax credit in the state, an endeavor that has not been successful in the past. There are currently three scholarship tax credit bills before the Maryland House, including S.B. 706’s companion bill (H.B. 1343), the article points out.
Whether any of these bills will become law is anyone’s guess, but the odds may be shifting in their favor. Maryland Governor Larry Hogan showed his support for scholarship tax credits in the past, going so far as to back legislation. Now, the primary opposition to these bills may be changing their stance, as noted in The Washington Post. It appears as though legislators from areas with underperforming schools are becoming more open to this legislation, according the article.
South Dakota S.B. 159 was also recently enacted by the state’s legislature. If signed into law, the credit will be available to insurance companies to apply against the state’s insurance premiums tax. Even so, several issues with the bill have been raised. Opponents to the credit in the state’s legislature voiced concerns over funding for public schools, according to the Insurance Journal. However, this opposition was not successful.
Questions surrounding funding for public schools are not the only questions that have been asked about this credit in South Dakota. The legislation has been passed along to the state Supreme Court by Governor Dennis Daugaard for a determination of its constitutionality, as reported by Mark Wolski in Bloomberg BNA’s Weekly State Tax Report. Gov. Daugaard has requested the court issue an advisory opinion prior to taking action on the bill because of concerns surrounding the separation of church and state, the article points out.
These are just a few examples of recent debates surrounding scholarship tax credits. As more and more states look into expanding educational opportunities for their residents, scholarship tax credits will continue to pop up and the discussion will most likely continue to be heated.
*Continue the discussion on Bloomberg BNA's State Tax Group on LinkedIn: Do Scholarship tax credits violate the separation of church and state?
For more information about tax credits, check out Bloomberg BNA’s Credits and Incentives Portfolios by signing up for a free trial of the Bloomberg BNA Premier State Tax Library today.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)