Arizona's ongoing tuition tax credit scam was well documented back in 2009 courtesy of some terrific investigative reporting, and it continues to come up in our media now and again. Nothing has changed—what else is new in Arizona?—but at least it's out in the open for anyone who wants to read about it. It's nice to see this Oldie But Goodie getting some national coverage in a New York Times story, DeVos and Tax Credit Vouchers: Arizona Shows What Can Go Wrong
. The story's poster child for tax credit profiteering is our own state Senate President Steve Yarbrough.
The Times story begins, "Steve Yarbrough is one of the most powerful men in Arizona." Then it talks about our backdoor voucher program, tuition tax credits, where people give money to School Tuition Organizations and get all of it back when they pay their taxes, meaning their "donation" costs them nothing. The taxpayer picks up the tab, since 100 percent of that money otherwise would have gone into the state coffers. The STOs use most of the money to pay for students' private school tuitions. It can pay for poor kids to go to private schools, but the money can also be used to pay full tuition for millionaires' sons and daughters to attend the most exclusive, expensive private schools in the state. The more you know about this program, the worse it gets.
The dirty secret hidden inside the voucher plan, the Ka-ching! that puts a twinkle in Sen. Yarbrough's eye, is that ten percent of the tuition tax credit money goes to pay the STO's overhead. If your STO pulls in, say, $18 million, like Yarbrough's Arizona Christian School Tuition Organization did in 2014, the most recent year with an online tax form from the STO, that means $1.8 million can be used to pay for the expense of collecting money from donors and handing it out to schools. That's good money if you can get it. Yarbrough gets a $125,000 salary out of the deal. But as the Times piece points out, that's only part of his total take. He owns HY Processing which does the bookkeeping/tech work for the STO, for which it makes $636,000 a year. Yarbrough owns the building that houses the STO, which brings him $52,000 in rent. The STO paid for his car.
I imagine Yarbrough smiles all the way to the bank when he's on his way to the State Capitol to do "the people's work"—with Steve Yarbrough being Steve's favorite "people."
The reason for the Times
article is that Trump and his Ed Sec Betsy DeVos are looking to set up a similar tax credit voucher plan nationwide. Trump's campaign idea of writing a $20 billion check from the feds to pay for vouchers didn't go over so well with Republican members of Congress, so Trump's people are thinking, if the same amount of money is short-stopped before it makes it into the government coffers using a plan like Arizona's, it would have the same effect without actually showing up in the federal budget.