Put Parents in Charge Act

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Put Parents in Charge Act

• H.3204

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The Campaign Methods
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The Campaign Methods
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What Does This Act Do?

• Authorizes Two Kinds of Tax Credits
• Tuition Tax Credits
• Scholarship Granting Organizations (SGO)
• NOTE Each one of these tax credits is a dollar
  for dollar credit, the amount paid or donated
  reduces the taxes by equal amount

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Tuition Tax Credit

• Available to any taxpayer
• (parent, grandparent, boyfriend, etc.)
• No limit on taxpayer income
• Credit can be taken against income, corporate
  and insurance premium tax
• Taxpayer must have paid tuition for a
  qualifying student
• Qualifying student must have parent or
  guardian with 75,000 or less taxable income

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Qualifying Student

• Must
• Be attending a private school
• Be home schooled
• Be attending a public school in a district
  different from residence district
• Have a parent or guardian with income of 75,000
  or less taxable income

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What is Taxable Income

• 75,000 of taxable income equals 95,000 income
  for mother/father and one child household
• Get there by this example
• 75,000 is increased by 5,000 for each exemption
  above 2, this gets the income to 80,000
• Each exemption carries 3,100, this will get a
  taxpayer to 89,300
• With mortgage payments and other deductions this
  figure could get to 95,000 range

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How the Tax Credit Works

• Tuition paid in August and January
• Tax credit received in following April when tax
  return filed
• Tax credit maximum amount set by formula is
  estimated to be 4,100
• Phased in starting with K-4th grades in 2006
• Final phase K-12 in 2010

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What is a SGO?

• Scholarship Granting Organization
• New tax entity created in this Act
• Must be a part of a 501(C)(3) corporation
• Must register with Department of Revenue
• Must do an annual report on June 30 each year

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What Can a SGO Do?

• It can accept unlimited amount of contribution
  from any taxpayer regardless of the amount of
  income of that taxpayer.

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What Can a SGO DO?

• By contributing to the SGO, taxpayer receives a
  dollar-for-dollar tax credit for the amount of
  contribution on the taxpayers state income tax
  return regardless of the amount of the
  contribution.

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What Can a SGO Do?

• The taxpayer/corporation can take this credit
  against
• Income Tax
• Corporate Tax
• Insurance Premium Tax

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What Can a SGO Do?

• It can keep 5 of the contributions for
  administration costs
• After the administration costs, SGO must use
  the remaining amounts to be utilized for payment
  of tuition for Qualifying Student as defined
  previously

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What Can a SGO Do?

• It can pay 80 of the amount of tuition up to
  4,100
• It can pay 100 of amount of tuition for
  free/reduced lunch student

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Where is the bill now?

• H.3204 is in the South Carolina House of
  Representatives Ways and Means Committee
• It has not been assigned to a subcommittee yet
  for any debate or for a hearing

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Who is Pushing This Legislation?

• Governor Sanford is pushing this bill
• Many out-of-state investors are paying for the
  lobbying and other efforts to get this bill
  passed. (There is no evidence that those funding
  this effort are from South Carolina. All are out
  of state.)
• Those who feel that our current public education
  system is failing to educate our children
  adequately.
• Some private school and home school advocates.

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What Should You Do?

• Study this bill carefully
• Let me and other Legislators know how you feel it
  will effect our education communities both
  private and public
• Understand that this a major income tax changing
  legislation and not just a bill touted as an
  education improvement bill.

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Things You Should Consider

• South Carolina public education is funded by the
  sales tax. By law, all sales tax goes to public
  K-12 and public higher education institutions
• This bill does not take anything directly away
  from public education dollars in the sales tax

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Things You Should Consider

• The South Carolina income tax funds
• Law enforcement agencies
• Prison/correction system
• Mental health care

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Things You Should Consider

• Medicaid benefits for nursing home beds and
  medicines
• Public health care and environmental control
  functions
• Aid to subdivisions that helps hold down county
  property taxes

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• Thank You!