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Georgia’s Scholarship Tax-Credit Program challenged in lawsuit

Georgia’s six-year-old Tax Credit Scholarship Program is the most recent school choice program to be challenged in court. The program provides tax credit scholarships for public school students to attend the private school of their parents' choice.

Georgia’s Scholarship Tax-Credit Program challenged in lawsuit
Georgia’s Scholarship Tax-Credit Program challenged in lawsuit
Photo courtesy of Institute for Justice

In April, a lawsuit was filed by a group of Georgia parents backed by the Southern Education Foundation, claiming the scholarship tax credits violate both the state constitution and tax laws by, among other things, providing indirect public funding to religious schools, giving donors illegal benefits and allowing a publicly funded school program to be run by private groups.

In May, the Institute for Justice intervened on behalf of certain Georgia families seeking to dismiss the lawsuit. According to Attorney Tim Keller, who is the Institute for Justice's lead counsel in the case, "Georgia’s school choice program is one of the largest in the country for a reason: It gives thousands of Georgia parents an opportunity to find a school that best fits their kids’ needs without using a single cent of state funds." Keller is confident that the case will be dismissed.

Since its inception six years ago, the scholarship program has proven immensely popular. It currently provides scholarships to more than 13,000 students, making it the fourth largest school choice program in the country. The program is entirely funded by voluntary donations from individuals and businesses. Donations to the program are offset with a dollar-for-dollar tax credit, up to $1,000 for individuals, $2,500 for families, and $10,000 for businesses. Tax-credit-eligible donations are capped at $58 million annually.

Writing in the Athens Banner-Herald, Mike Klein editor at the Georgia Public Policy Foundation, explains that public support has overwhelmed the program. The 2012 tax credit cap of $58 million was reached in mid-August. This year’s budget cap was reached in the first three weeks. About 13,000 of Georgia’s 1.8 million K-12 school children receive tax credit scholarship assistance. The statewide average scholarship amount in 2012, the latest data available, was $3,388.

You can watch Georgia GOAL Scholarship Program founder and general counsel Jim Kelly explain how the state tax credit scholarship is funded in the accompanying video.

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Franklin School Choice Fellow