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| SPONSOR: | Russell | DATE TYPED: | 02/23/01 | HB | 422 | ||
| SHORT TITLE: | Tuition Scholarship Tax Credit | SB | |||||
| ANALYST: | Williams | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY01 | FY02 | |||
| $ (1,000.0) | $ (10,700.0) | Recurring | General Fund | |
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates/Conflicts with/Companion to/Relates to HB 55, HB 420, HB 421
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department (TRD)
State Department of Education (SDE)
SUMMARY
Synopsis of Bill
The bill authorizes a non-refundable, personal income tax credit for contributions to a New Mexico school for tuition scholarships for low income students, i.e. up to 185% of the poverty level. The credit is not to exceed $500. A tuition scholarship for a low income student must not exceed 95 percent of the cost of tuition to attend the school. The taxpayer cannot designate an individual student as intended beneficiary of the contribution. The school must provide a receipt to the taxpayer. The credit would be effective beginning tax year 2001.
Significant Issues
According to the distribution of income as reported on tax returns, 47.3% of New Mexico's population is at or below 185% of poverty.
If the school is organized as a non-profit, then the donation may also be deducted for federal and state income tax purposes.
SDE notes pre-school programs would not be eligible.
SDE notes the bill does not specify the type of accreditation that would be required.
FISCAL IMPLICATIONS
TRD estimates the fiscal impact in the first year at a general fund revenue loss of $1,000.0. In the second year, the revenue loss is estimated at $10,700.0 as schools and parents adjust their behavior to fully maximize their tax advantages under the law.
OTHER SUBSTANTIVE ISSUES
TRD notes concerns about state money devoted to education be appropriated to public schools.
AW/ar