New Hampshire’s voucher tax credit law established a complex 11 step laundering process in an attempt to disguise the State’s tax expenditure as private money. The key question in the court hearing today in Strafford County court will be whether the Court agrees that it’s a scam. Here are the 11 steps:
- The Legislature passes a law that authorizes the State to grant a certain dollar amount of tax credits. Those appear as expenditures in the State’s budget alongside all other state expenditures. The Legislature appropriated $8.5 million dollars for the first two years of the program.
- A businesses applies to the New Hampshire Department of Revenue Administration for the tax credits.
- NHDRA approves, allocating a certain amount to the business on a first come first served basis.
- Within 60 days, the business must donate the money to a scholarship organization or lose the allocation of tax credits. For a $10,000 donation, for instance, the business will pay about $429 out of pocket. The rest is money it would have paid in taxes. So it’s just as if the business had written a check on the State’s bank account.
- The scholarship organization provides a donation receipt to the NHDRA.
- The scholarship organization can take up to 10% of that as a fee. (One scholarship organization, NEO, offered to kick back part of this the religious schools that helped get business donations.)
- The scholarship organization gives the rest of the donation out as tuition subsidy, directly to schools, for specific children.
- The scholarship organization then gives the business a second receipt saying that the money has gone to a school.
- The business provides that receipt to NHDRA in lieu of taxes it would have owed.
- If the student came from a public school that receives state adequacy aid, the State reduces the school’s adequacy aid by the amount that would have gone to the school for that student.
- The school either reduces it’s budget or increases local property taxes to make up for the loss.
This is the process that the State and the intervener, the Institute of Justice, must persuade the judge results in private money going to religious schools.