This is the Cato Daily Podcast for Wednesday, September 5th, 2007.

I'm Caleb Brown.

The School Choice Movement has for years been dominated by talk of education vouchers that idea put forth by

Milton Friedman in the 1950s but is it still the best option for expanding school

choice and creating a true marketplace for education.

Adam Schaefer is a policy analyst in the Cato Institute.

He says that tax credits have gotten short shrift in the struggle for more and better school

choice options, while vouchers have gotten more and perhaps some undeserved

attention.

The two basic types are personal use and donation tax credits. Personal use are just used by the family that claims the tax credit

on their tax return.

And donation tax credits are given to scholarship

organizations that then provide scholarships

to needy families, lower income families that need some help.

How do these tax credits function?

Well, basically it's real simple.

You spend a certain amount of money on education, say $2,000. If you have a tax liability, if you owe the state or local government something, you take that right off your tax bill. So if you owe $3,000, spend 2,000 on education,

you only owe $1,000 to the state. Same thing goes if you donate money to a scholarship organization and in that case the

scholarship money is then provided to a low-income family.

Where do these types of tax credits operate right now?

Well, Arizona has a personal, well, an individual donation tax credit.

Minnesota, Iowa, Illinois all have personal use tax credits. They're pretty small

...