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The Optimal Size of the Tuition Tax Credit

Author

Listed:
  • F. Martinello

    (Brock University)

  • E. G. West

    (Carleton University)

Abstract

If we assume that price elasticity of demand for private schooling is 0.5, education tax credits even as low as $250 can be expected to reduce total government expenditure on education quite significantly. Recent empirical measures of such elasticities, however, are much higher. Based on these, a tax credit in the region of $1,000 would reduce expenditures by over $3.4 billion. If taxes are reduced accordingly, the gains to taxpayers would be higher to the extent of an appreciable reduction in marginal deadweight losses from the tax system.

Suggested Citation

  • F. Martinello & E. G. West, 1988. "The Optimal Size of the Tuition Tax Credit," Public Finance Review, , vol. 16(4), pages 425-438, October.
    • Handle: RePEc:sae:pubfin:v:16:y:1988:i:4:p:425-438
    DOI: 10.1177/109114218801600402
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    References listed on IDEAS

    as
    1. Usher, Dan, 1986. "Tax Evasion and the Marginal Cost of Public Funds," Economic Inquiry, Western Economic Association International, vol. 24(4), pages 563-586, October.
    2. Edwin West, 1985. "The real costs of tuition tax credits," Public Choice, Springer, vol. 46(1), pages 61-70, January.
    3. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-138, March.
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    Cited by:

    1. F. Martinello & E.G. West, 1991. "Education Budget Reductions Via Tax Credits: Some Further Considerations," Public Finance Review, , vol. 19(3), pages 355-368, July.
    2. Hoyt, William H. & Lee, Kangoh, 1998. "Educational vouchers, welfare effects, and voting," Journal of Public Economics, Elsevier, vol. 69(2), pages 211-228, June.
    3. Donald E. Frey, 1991. "Demand and Supply Elasticities for Private Education: a Rejoinder," Public Finance Review, , vol. 19(3), pages 369-376, July.
    4. Cohen-Zada, Danny & Justman, Moshe, 2005. "The religious factor in private education," Journal of Urban Economics, Elsevier, vol. 57(3), pages 391-418, May.

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