The vast majority of the attention given to the Bush tax cuts has been focused on changes in top marginal rates, the treatment of capital gains income, and the estate tax.  But another, less visible component of those cuts has been gradually making itemized deductions more unfair and expensive over the last five years.  Since the vast majority of states offering itemized deductions base their rules on what is done at the federal level, this change has also resulted in state governments offering an ever-growing, regressive tax cut that they clearly cannot afford. 

In an attempt to encourage states to reverse the effects of this costly and inequitable development, the Institute on Taxation and Economic Policy (ITEP) this week released a new report, "Writing Off" Tax Giveaways, that examines five options for reforming state itemized deductions in order to reduce their cost and regressivity, with an eye toward helping states balance their budgets.

Thirty-one states and the District of Columbia currently allow itemized deductions.  The remaining states either lack an income tax entirely, or have simply chosen not to make itemized deductions a part of their income tax — as Rhode Island decided to do just this year.  In 2010, for the first time in two decades, twenty-six states plus DC will not limit these deductions for their wealthiest residents in any way, due to the federal government's repeal of the "Pease" phase-out (so named for its original Congressional sponsor).  This is an unfortunate development as itemized deductions, even with the Pease phase-out, were already most generous to the nation's wealthiest families.

"Writing Off" Tax Giveaways examines five specific reform options for each of the thirty-one states offering itemized deductions (state-specific results are available in the appendix of the report or in these convenient, state-specific fact sheets).

The most comprehensive option considered in the report is the complete repeal of itemized deductions, accompanied by a substantial increase in the standard deduction.  By pairing these two tax changes, only a very small minority of taxpayers in each state would face a tax increase under this option, while a much larger share would actually see their taxes reduced overall.  This option would raise substantial revenue with which to help states balance their budgets.

Another reform option examined by the report would place a cap on the total value of itemized deductions.  Vermont and New York already do this with some of their deductions, while Hawaii legislators attempted to enact a comprehensive cap earlier this year, only to be thwarted by Governor Linda Lingle's veto.  This proposal would increase taxes on only those few wealthy taxpayers currently claiming itemized deductions in excess of $40,000 per year (or $20,000 for single taxpayers).

Converting itemized deductions into a credit, as has been done in Wisconsin and Utah, is also analyzed by the report.  This option would reduce the "upside down" nature of itemized deductions by preventing wealthier taxpayers in states levying a graduated rate income tax from receiving more benefit per dollar of deduction than lower- and middle-income taxpayers.  Like outright repeal, this proposal would raise significant revenue, and would result in far more taxpayers seeing tax cuts than would see tax increases.

Finally, two options for phasing-out deductions for high-income earners are examined.  One option simply reinstates the federal Pease phase-out, while another analyzes the effects of a modified phase-out design.  These options would raise the least revenue of the five options examined, but should be most familiar to lawmakers because of their experience with the federal Pease provision.

Read the full report.

The vast majority of the attention given to the Bush tax cuts has been focused on changes in top marginal rates, the treatment of capital gains income, and the estate tax.  But another, less visible component of those cuts has been gradually making itemized deductions more unfair and expensive over the last five years.  Since the vast majority of states offering itemized deductions base their rules on what is done at the federal level, this change has also resulted in state governments offering an ever-growing, regressive tax cut that they clearly cannot afford. 

In an attempt to encourage states to reverse the effects of this costly and inequitable development, the Institute on Taxation and Economic Policy (ITEP) this week released a new report, "Writing Off" Tax Giveaways, that examines five options for reforming state itemized deductions in order to reduce their cost and regressivity, with an eye toward helping states balance their budgets.

Thirty-one states and the District of Columbia currently allow itemized deductions.  The remaining states either lack an income tax entirely, or have simply chosen not to make itemized deductions a part of their income tax — as Rhode Island decided to do just this year.  In 2010, for the first time in two decades, twenty-six states plus DC will not limit these deductions for their wealthiest residents in any way, due to the federal government's repeal of the "Pease" phase-out (so named for its original Congressional sponsor).  This is an unfortunate development as itemized deductions, even with the Pease phase-out, were already most generous to the nation's wealthiest families.

"Writing Off" Tax Giveaways examines five specific reform options for each of the thirty-one states offering itemized deductions (state-specific results are available in the appendix of the report or in these convenient, state-specific fact sheets).

The most comprehensive option considered in the report is the complete repeal of itemized deductions, accompanied by a substantial increase in the standard deduction.  By pairing these two tax changes, only a very small minority of taxpayers in each state would face a tax increase under this option, while a much larger share would actually see their taxes reduced overall.  This option would raise substantial revenue with which to help states balance their budgets.

Another reform option examined by the report would place a cap on the total value of itemized deductions.  Vermont and New York already do this with some of their deductions, while Hawaii legislators attempted to enact a comprehensive cap earlier this year, only to be thwarted by Governor Linda Lingle's veto.  This proposal would increase taxes on only those few wealthy taxpayers currently claiming itemized deductions in excess of $40,000 per year (or $20,000 for single taxpayers).

Converting itemized deductions into a credit, as has been done in Wisconsin and Utah, is also analyzed by the report.  This option would reduce the "upside down" nature of itemized deductions by preventing wealthier taxpayers in states levying a graduated rate income tax from receiving more benefit per dollar of deduction than lower- and middle-income taxpayers.  Like outright repeal, this proposal would raise significant revenue, and would result in far more taxpayers seeing tax cuts than would see tax increases.

Finally, two options for phasing-out deductions for high-income earners are examined.  One option simply reinstates the federal Pease phase-out, while another analyzes the effects of a modified phase-out design.  These options would raise the least revenue of the five options examined, but should be most familiar to lawmakers because of their experience with the federal Pease provision.

Read the full report.

Efforts are underway in a variety of states to give voters the opportunity to change their state's tax structure for the better. Advocates are laying the ground work for tax reform in Colorado. Tax justice advocates in Arizona can celebrate that a Proposition 13-like initiative didn't garner enough signatures to be placed on the ballot. California voters will get the chance to repeal various corporate tax loopholes while Washington is closer than ever before to introducing a personal income tax.

In Colorado, folks are thinking about the 2012 ballot already. Representatives of the Colorado Fiscal Policy Institute (CFPI) have filed two initiatives that are currently being reviewed to determine if they abide by the state's "single subject" per initiative rule. According to The Denver Post, "the measures also call for reducing the state sales tax but taxing services as well as goods, changing the income-tax system to a graduated system and making a tax credit for low-income workers permanent." Specifically the proposal would change Colorado's flat rate income tax into a graduated system with a least five brackets. Carol Hedges with CFPI recently said of the initiatives that "the overriding objective is to have our tax system more appropriately matched with economic realities."

Arizonans swerved and missed the tax policy equivalent of a Mack truck slamming into them when it was announced that "Prop. 13 Arizona" failed to garner enough signatures to qualify for the 2010 ballot. The proposal was modeled after California's Proposition 13. The measure would have rolled back the assessed value of property sold before 2004 to 2003 levels, limited property value increases, and taken away voters' rights to override levy limits. This is the second time that the proposal failed to garner enough signatures. For more on capping assessed value, see ITEP's primer on the subject.

In November, California voters will get to vote on the Repeal Corporate Tax Loopholes Act. The measure, if passed, would eliminate several business tax breaks enacted in 2008 and 2009. They include elective single sales factor, tax credit sharing, and net operating loss carrybacks. For more details on these tax breaks, see California Budget Project's Budget Brief on this issue. Perhaps more upsetting than these tax breaks actually passing is the way they were passed. Initially, according to the California Budget Bites Blog, these tax deals were of the "dark-of-night" variety. Now Californians themselves will decide if these costly corporate tax breaks should remain the law of the land.

Washingtonians are closer than they have ever been to establishing a personal income tax. Washington has repeatedly been named by ITEP as the state with the most regressive tax structure largely because of their high reliance on sales taxes and absence of a personal income tax. Initiative 1098 introduces an income tax that has two brackets targeted at high income Washingtonians, reduces the state property tax, and reforms the business and occupation tax. Supporters of the initiative this week turned in well over the 241,000 signatures required to get on the ballot. It appears that Washingtonians will have an exciting and historic opportunity to reform their state's tax structure this fall.

The Arizona Republic this week ran an excellent article detailing just how wrong anti-tax legislators were in assuming that their constituents would oppose a tax hike.  A temporary sales tax hike that barely made it out of the legislature earlier this year was approved by voters last month by an overwhelming 64-36% margin.  The measure also enjoyed solid majorities in many of the districts held by lawmakers that opposed sending this measure to the ballot.

One year after the Republican Chair of the House Appropriations Committee confidently declared that “Republicans in my district don’t want a tax increase,” State Rep. John Kavanagh’s District 8 joined the overwhelming majority of Arizonans in supporting the hike.  Similarly, District 22, represented by Republican Senator Thayer Verschoor — who headed the campaign in opposition to the sales tax — voted strongly in favor of the tax as well.  Notably, District 22 is also home to two other Republican representatives that voted against allowing their constituents to a chance to decide on the sales tax hike.  When all was said and done, every county in the state except for Mohave voted in support of the increase.

Without a doubt, the approval of this hike — despite its flaws — was both an enormous victory for the people of Arizona, and a sharp condemnation of the rabidly anti-tax nature of the state’s elected officials.  Fred Solop of Northern Arizona University stated the obvious when he said that legislators’ claims that “we need to take a different tack with the state economy, cut back spending and programs” were in fact not “aligned with the values of Arizona voters.” 

Lattie Coor, formerly the president of Arizona State University, underscored this point further by noting that last year only 10% of Arizonans felt that their lawmakers represented them, and that "to find such a substantial variance between what voters actually did on a proposition before them … and the vote of their elected representatives, underscores the disconnect between citizens and elected officials.” 

Once again, this episode makes clear that the anti-tax attitudes of politicians should never be mistaken for actual anti-tax sentiment among Americans.

Arizona’s 1 percentage point sales tax rate hike won approval from voters on Tuesday, telling us a lot about rightwing claims regarding the alleged “anti-tax,” “anti-government” nature of the American people.  In a state described by the Los Angeles Times as “famously tax-averse,” the overwhelming support received by this tax hike truly does “[run] counter to a common national narrative about 2010 being a sharply anti-tax year,” as Pew’s Stateline publication explained earlier this week.

The hike will take effect on June 1, and will raise Arizona’s state-level sales tax rate from 5.6% to 6.6% for the next three years.  The higher rate is expected to generate about $1 billion per year in revenue, and will prevent the need for so-called “contingency spending cuts” of a similar magnitude in K-12 education, universities, public safety, health care, and services for the disabled.  

But while the sales tax hike is far preferable to the devastating cuts that would have been required in its absence, it is also far from the ideal progressive solution.  Arizona policymakers should not overlook the fact that the state’s newly increased sales tax rate will exacerbate the unfairness of a state tax system that was recently ranked by ITEP as the 7th most regressive in the entire nation.  In a state where the poorest residents already pay over two and a half times as much of their income in state and local taxes as the richest 1%, the need for additional tax relief for the state’s poor has just become even more dire.  Future changes to the Arizona tax code should be guided first and foremost with this thought in mind.

For many states, the fiscal picture for the next year remains cloudy at best. After years of painful spending cuts, how can states balance their budgets without further damaging essential public investments? A new report from United for a Fair Economy (UFE) lays out a few important guidelines for budget reform.

Among the more interesting recommendations: States shouldn't be afraid to meet spending needs by borrowing or drawing down their rainy day funds — but should do each in a straightforward and rational manner. This means that states seeking to adequately fund public investments that benefit future generations (such as transportation spending) shouldn't feel bad about issuing general obligation debt to fund these needs, ensuring that future generations will pay part of the cost of funding these investments. (Of course, lawmakers generally don't need any help shifting costs to future generations, but it's important to remember that there is, in some areas, a sound rationale for doing so.)

On rainy day funds, the report is a reminder that when the rainy days come, the funds should be used — and that damaging cuts to education and health care spending are a far worse result than depleting state reserves.

Responding to a recent report from the Pew Center for the States that generated hysterical headlines about unfunded state pension systems, the UFE report also notes that in the short run, unfunded long-term liabilities of the sort documented in the Pew report are a far better alternative than the loss of vital public services in the present day.

As the report reminds us, virtually every state could avoid damaging spending cuts through progressive tax reform focused on the state income tax — but these other tools should also be considered before resorting to further across-the-board spending cuts.

This week the Oklahoma Policy Institute released a report urging, among other things, that one of the state’s more ridiculous tax breaks be eliminated — specifically, the state income tax deduction for state income taxes.  This deduction was created not as a result of careful consideration and debate among Oklahoma policymakers, but rather as an accidental side-effect of the state’s “coupling” to federal income tax rules.  And as the New Mexico Legislative Finance Committee politely points out, while the deduction may make some sense at the federal level, the rationale for providing it at the state level is “less clear.”

Citing figures provided by ITEP, the Oklahoma Policy Institute notes that only one out of four Oklahomans would be affected by eliminating this deduction, and roughly 58% of the overall tax hike would be borne by those richest 5% of Oklahomans.  This is a predictable result of the deduction only being available to itemizers.  In total, the state could collect an additional $118 million in revenue each year by eliminating the deduction — revenue that could go a long way toward preserving important public services.

State income tax deductions for state income taxes have been receiving a growing amount of attention.  Last year, Vermont limited its deduction to a maximum of $5,000, while just last week New Mexico Governor Bill Richardson signed a budget eliminating his state’s deduction entirely.  The Georgia Budget and Policy Institute (GBPI) also highlighted the benefits of eliminating this deduction in a policy brief released just a few weeks ago.

In total, seven states currently offer this deduction: Arizona, Georgia, Hawaii, Louisiana, Oklahoma, Rhode Island, and Vermont.  Eliminating the deduction in each of these states is long overdue.

As a quick glance through the Digest's Arizona archives reveals, the Arizona budget debates over the past year have been an utter disaster.  Against this backdrop, the efforts of a group of Arizona hospitals to get a high-incomes tax increase onto the ballot are truly a sight for sore eyes.

The Arizona Hospital and Healthcare Association is preparing to file the paperwork needed to get a 1 percentage point increase in the state's top income tax rate onto the November ballot.  The increase would affect only a small group of fortunate Arizonans — those earning more than $150,000 per individual, or $300,000 per married couple.  The Association would like to see the additional revenue directed toward improving health care in the state. This is crucial for a state that recently repealed its Children's Health Insurance Program.

Arizona's budget-balancing techniques have bordered on the comical in recent months. Lawmakers have enacted legislation that would help balance the current year's budget by selling off state buildings, including the state capitol — and then immediately leasing them back, providing a one-shot revenue boost for this year, and then actually worsening the state's budget deficit in every ensuing year as the state pays a variety of new landlords. As a "Daily Show" interview displayed horrifically, state lawmakers simply had no answer to the question "what happens next year?"

Southwest neighbors Arizona and New Mexico may share a common border, but news reports from each state this week make them look worlds apart.  

In Arizona, after refusing for months to support Governor Jan Brewer’s call for a temporary increase in the state’s sales tax, leading Republicans have put forward a tax plan of their own.  Unfortunately, rather than raising the revenue necessary to address the state’s staggering budget deficit of $4.4 billion (over the next 18 months), their plan would dramatically reduce personal and corporate income taxes, as well as the property taxes paid by businesses.

The backers of the plan claim that it would not worsen the state’s fiscal outlook, as the reductions would be phased in over a number of years. But that is precisely the approach the state followed over the course of the 1990s – a course of action that has put the state in its current predicament.  Moreover, while the plan apparently would not take effect until July 2011, the Joint Legislative Budget Committee has indicated for quite a while that Arizona's revenues are unlikely to return to their pre-recession levels before that time.

Meanwhile, in New Mexico, Governor Bill Richardson recommended raising taxes by $200 million (on a temporary basis) to help close the state's budget gap.  However, he appears to have left the details of which taxes to increase to the legislature and the Budget Balancing Task Force he appointed late last year. 

While the Task Force has an array of options before it, the best approach – the repeal of New Mexico’s tax break for capital gains income – has already been ruled out by the Governor. (This is no surprise, since Richardson was the break’s chief advocate when it was put into law in 2003.) Still, as ITEP found in its March 2009 report, “A Capital Idea,” capital gains tax breaks “deprive states of millions of dollars in needed funds, benefit almost exclusively the very wealthiest members of society, and fail to promote economic growth in the manner their proponents claim.”

For more on the fiscal crises in Arizona and New Mexico, visit Children’s Action Alliance and New Mexico Voices for Children.

This week, the Institute on Taxation and Economic Policy (ITEP), in partnership with state groups in forty-one states, released the 3rd edition of “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States.”  The report found that, by an overwhelming margin, most states tax their middle- and low-income families far more heavily than the wealthy.  The response has been overwhelming.

In Michigan, The Detroit Free Press hit the nail on the head: “There’s nothing even remotely fair about the state’s heaviest tax burden falling on its least wealthy earners.  It’s also horrible public policy, given the hard hit that middle and lower incomes are taking in the state’s brutal economic shift.  And it helps explain why the state is having trouble keeping up with funding needs for its most vital services.  The study provides important context for the debate about how to fix Michigan’s finances and shows how far the state really has to go before any cries of ‘unfairness’ to wealthy earners can be taken seriously.”

In addition, the Governor’s office in Michigan responded by reiterating Gov. Granholm’s support for a graduated income tax.  Currently, Michigan is among a minority of states levying a flat rate income tax.

Media in Virginia also explained the study’s importance.  The Augusta Free Press noted: “If you believe the partisan rhetoric, it’s the wealthy who bear the tax burden, and who are deserving of tax breaks to get the economy moving.  A new report by the Institute on Taxation and Economic Policy and the Virginia Organizing Project puts the rhetoric in a new light.”

In reference to Tennessee’s rank among the “Terrible Ten” most regressive state tax systems in the nation, The Commercial Appeal ran the headline: “A Terrible Decision.”  The “terrible decision” to which the Appeal is referring is the choice by Tennessee policymakers to forgo enacting a broad-based income tax by instead “[paying] the state’s bills by imposing the country’s largest combination of state and local sales taxes and maintaining the sales tax on food.”

In Texas, The Dallas Morning News ran with the story as well, explaining that “Texas’ low-income residents bear heavier tax burdens than their counterparts in all but four other states.”  The Morning News article goes on to explain the study’s finding that “the media and elected officials often refer to states such as Texas as “low-tax” states without considering who benefits the most within those states.”  Quoting the ITEP study, the Morning News then points out that “No-income-tax states like Washington, Texas and Florida do, in fact, have average to low taxes overall.  Can they also be considered low-tax states for poor families?  Far from it.”

Talk of the study has quickly spread everywhere from Florida to Nevada, and from Maryland to Montana.  Over the coming months, policymakers will need to keep the findings of Who Pays? in mind if they are to fill their states’ budget gaps with responsible and fair revenue solutions.

Arizona currently faces a roughly $2 billion budget deficit in the current fiscal year, with agencies such as the Department of Revenue on the verge of depleting all available funding.  Yet, as they have done multiple times over the past five months, state legislators have once more proven unable to craft a comprehensive and balanced solution to the problem before them.  As the Arizona Republic reports, the Senate Republican leadership yet again fell one vote short of passing a plan that, among other things, would slash $300 million in funding from K-12 education and social services.  Senate leadership failed to win a single Democratic vote – and thus to  generate a majority for its latest budget plan – in large measure because it continues to refuse to consider any options for generating additional tax revenue.  As Sen. Ken Cheuvront argued, “there … needs to be a two-pronged approach … As we make those cuts, we also have to look at raising revenues.”

There is certainly support in some quarters for that sort of balanced approach.  The mayors of Chandler, Gilbert, Mesa, and Tempe – who collectively represent roughly a sixth of Arizona’s population – recently came together to express support for revamping the state’s tax system and to urge state lawmakers to avoid pushing the state’s budget difficulties onto municipalities.  In addition, the Arizona Budget Coalition, which includes SEIU, the Arizona Education Association, and the Children’s Action Alliance (CAA), this week announced its own set of alternatives to the plan backed by legislative leadership; among those alternatives are an increase in the state’s sales tax rate and modifications to the state’s controversial tuition tax credits.  

To learn more about the role that tax cuts have played in creating Arizona’s budget crisis, read this helpful report from the CAA.

With legislative sessions starting in just a few months, advocates and the press are weighing in on the options available to cash-strapped states. Kentucky lawmakers are urged to find a real solution to the state's fiscal woes. Idaho's Governor is suddenly open to delaying an improvement in an important tax justice tool. Maryland advocates urge a balanced approach to this year's budget, Arizona researchers offer insight into the cost of previous tax cuts, and Ohio lawmakers rethink their own previously enacted tax cuts.

Kentucky

Late last week, Kentucky's Lexington-Herald Leader published an editorial urging lawmakers to reform that state's tax code, saying "Our representatives and senators turned to a 'smoke and mirrors' approach to budgeting because they simply lacked the backbone to do the right thing: Pass the kind of real tax reform that could provide state government with a stable, sustainable revenue base." They fear that during this session lawmakers will continue to cut important programs instead of fixing the state's revenue stream. The paper warns the lawmakers appear to be on track to continue "robbing Peter to pay Paul...Only this time, Peter is a schoolchild."

Idaho

Tax fairness advocates in Idaho may be facing a similar uphill battle. Governor Butch Otter, once a strong proponent of the state's grocery tax credit (which helps to offset the state's sales tax on food), has now left the door open for delaying an increase in the credit amount in order to save the state $15.5 million. Of course, now is precisely the wrong time to delay such an important credit specifically targeted to help offset the state's regressive sales tax on food. While it's important to keep all options on the table, during this time of fiscal upheaval delaying the increase in this credit is an option that should be quickly dismissed.

Maryland

Recently the Maryland Budget and Tax Policy Institute released a paper urging lawmakers to approach the state's budget woes in a balanced way. The report makes a strong case against a cuts-only budget. "An all-cuts budget solution would sacrifice too many of the things that make Maryland such a great state." The report goes on to offer a list of concrete revenue-raising options available to lawmakers interested in preserving the state's education, health, and transportation programs.

Arizona

Arizona's budget woes are dire. A new report from the Arizona Children's Action Alliance describes the state's budget crater, which is projected to be $1.5 billion for FY10 and $2.5 billion in FY11. The report is useful for any Arizona advocate interested in understanding the impact that previous rounds of tax cuts have had on the resources available to fund public services. It explains "why any [budget] package that results in further net loss to the state general fund endangers the common benefits that Arizona counts on." The report goes on to offer ten reasons why the state should freeze and reverse the harmful tax cuts from recent years.

Ohio

Last week, the Ohio House of Representatives voted to suspend the state's scheduled income tax rate reductions for two years to help plug a budget hole. Governor Ted Strickland congratulated members of the House, saying they "acted quickly, courageously and responsibly to protect Ohio schools from devastating cuts while reducing their own pay in solidarity with struggling Ohio families and businesses." Now the legislation moves to the state's Republican controlled Senate. Let's hope lawmakers there follow in the House's footsteps and put the needs of Ohio first.

Earlier this month, Governor Jan Brewer vetoed legislation repealing Arizona’s statewide property tax, which would have compounded the state's fiscal woes at a cost of $250 million annually. Her veto was both socially just and fiscally prudent, since the statewide property tax was designed to make school funding more equitable.  

But Arizona still has a long road to travel before it reaches the fiscal high ground.  A new analysis from the Joint Legislative Budget Committee indicates that the state continues to face a budget deficit of close to $1 billion in the current fiscal year, despite enormous cuts to public services that have been enacted recently. 

Governor Brewer would like to put a sales tax increase before the voters, which would certainly help to close this gap. Unfortunately, that is unlikely to happen this year because the legislature has so far refused to act on this proposal. 

How bad is Arizona’s budget situation?  Well, let’s put it this way:  the Daily Show may soon air a segment examining, in its own inimitable way, a proposal to sell, and then to lease back, a variety of state-owned property and buildings as a means of generating more than $700 million in the current fiscal year – and that proposal was just signed into law by Governor Jan Brewer.  Not only that, but that proposal was one of the few pieces of the budget that the Governor and the other members of her party, who happen to control both chambers of the Arizona legislature, could agree upon. 

The other seven bills that comprise the state’s fiscal year 2010 budget – none of which raise taxes and one of which would reduce them by some $250 million per year, a deficit of more than $3 billion notwithstanding – still await the Governor’s signature.  Hopefully, the Governor will continue to hold out for a ballot initiative that would temporarily raise the state’s sales tax to help address the state’s enormous revenue shortfall. Still, even if she succeeds and the initiative passes, a new analysis from the Joint Legislative Budget Committee indicates that budget deficits of more than $2 billion will return in FY 2012.

Not all of the tax policy news out of Arizona this week is bad, however.  A recent Arizona Republic expose found that the state’s school tuition organization tax credit not only failed to achieve its alleged goal of assisting low-income students, but also is vulnerable to rampant abuse by self-interested parents. In response, the second largest school tuition organization in the state, the Catholic Tuition Organization for the Diocese of Phoenix, announced that it would no longer allow donors to engage in one of the abusive practices in question, namely, specifying which students would receive the scholarship funded by the donor’s tax subsidized bequest.  (As the Republic found, less-than-scrupulous parents were coordinating with friends, family, and neighbors to name each other’s children as the beneficiaries of their tax-supported donations.)  Still, given that those taxpayers who claim the credit are far wealthier than most Arizonans, it may be time for the credit to be scrapped altogether