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How to Calculate the Costs or Savings of Tax Credit Voucher Policies

Proposals to create private school voucher systems funded using tax credits are now popping up in states throughout the nation. The fiscal impact of these proposals on those states’ budgets is, given the current squeeze on budgets, of great interest to legislators looking to find savings in every possible nook and cranny. This NEPC Policy Memo explains the factors that should be considered when calculating costs or savings, but it concludes that the most honest and conscientious approach to reporting the fiscal impact of tax credit vouchers is to provide a range of outcomes and let the readers — not the legislative analysts themselves — speculate on which is most likely. If a bottom line is demanded, it should be couched in as many cautions and limitations as can be fit on the page.