American Federation for Children Statement on Proposed IRS Rule

Statement from John Schilling, President of the American Federation for Children:

“The proposed IRS rule issued by the Treasury Department will harm state tax credit scholarship programs that are currently benefitting more than 250,000 students, most of whom are from lower-income and minority families. This will reduce charitable contributions to scholarship granting organizations (SGOs), reduce the number of scholarships available, and potentially force thousands of students into the low performing schools they were fortunate to escape.

“These SGOs are not state-sponsored “charities” – such as the ones that were set up by some states as workarounds to the state and local tax deduction (SALT) caps following passage of the Tax Cuts and Jobs Act of 2017. Those new state-sponsored “charities” should have been the sole focus of the proposed rule.

“The Treasury Department estimates that only a small percentage of taxpayers will be affected by this rule. Yet, many of these taxpayers reside in tax credit scholarship states and are making charitable contributions to SGOs. These taxpayers will now likely be advised by their Certified Public Accountants to stop donating to SGOs because of a reduced tax benefit – this ultimately hurts participating students.”