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Sunday, February 26, 2017

Education Policy is Tax Policy and the Real Challenge is the Latter

From the Education Law Prof Blog

By Derek Black
February 21, 2017

EdBuild has released a new report that analyzes the fundamental differences between how local communities tax themselves to fund education. It asks whether "low-wealth districts—those with low-value property tax bases—[are] forced to tax themselves more heavily than high-wealth districts in order to raise enough funding for their schools" and, "if so, what can be done about it."

The report finds that:

"... in the strictest sense, property taxation for education is usually regressive. In 11 of 18 states studied, overall education tax rates were found to be lower in school districts where property valuation per household was higher. (The reverse was found in just two states.)

But, it turns out, that’s not the whole story. While property taxes for education are regressive at the system level, things look quite different at the household level. In a plurality of states studied, overall school district tax rates were found to be higher in districts with greater median home values.

When the investigation was narrowed to property taxes for education paid specifically by homeowners, the results were a mix of progressive, regressive, and neutral findings: residential property tax rates were not found to be consistently related to district affluence. And neither overall tax rates nor tax rates on residential property were found to be consistently related to local income levels.

It emerges that property taxes for education may be regressive overall, but not usually because they overburden low-income households or low-wealth homeowners. Instead, this problem seems to arise mostly from the taxation of non-residential property, like businesses, factories, and farms.

It appears districts often fail to effectively leverage the non-residential property tax base for school funding, and this fact looms larger than any neutral or progressive taxation at the household level.

. . . . .

When districts do not take appropriate advantage of high-value tax bases, then that money must come from somewhere else—likely, from higher local taxes in districts whose smaller tax bases mean they will struggle to raise enough funding for their schools.

In this way, regressive local taxation for education undermines the fairness of the entire state’s education funding system."


This report is a must read for local policymakers and scholars of school funding. It reveals that conversations about inequitable and inadequate school funding may be missing the bigger picture. Fair school funding is not just about funding formulas and identifying student need. It is about tax policy.

Apparently, our tax policies have built-in biases that we rarely stop to challenge.

While I had since relegated it to the corners of mind, the report reminds me of a casual conversation with two tax professors about South Carolina's educational adequacy litigation. In my ignorance, I had not anticipated any deep insights about the litigation, but they immediately explained that the challenge for in arriving at a remedy in the litigation was not agreeing on funding levels for disadvantaged schools and students.

The real challenge was altering current tax structures in the state that the most powerful constituents would resist tooth and nail. They would resist not because they disagreed with the education agenda but because they wanted to retain the current biases in the tax code.

Get Ed Build's full report HERE.

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