Voucher programs—which use public funds to finance private education—have been sweeping state and federal legislatures over the past few years. These bills are harmful to public schools, especially public schools in rural communities. Yet, this week, the “Keep Public Funds in Public Schools Act” was introduced in the Senate, which would repeal the national private school voucher program passed in the 2025 reconciliation bill, thereby protecting rural communities from these programs. Often framed as “school choice” programs, vouchers give parents the equivalent of per-pupil public school funding to send their child to any private or homeschool program they choose.

But diverting public funds away from public K–12 schools and toward private schools does not guarantee educational opportunities will be expanded for all students—and this is especially true in rural communities. Most obviously, because students in rural communities often don’t have a private school option and therefore cannot use the vouchers, state voucher programs—which are financed by all the taxpayers in a state—amount to an education subsidy for wealthy urban families at the expense of strong public schools. Moreover, for rural areas that can support multiple school systems, voucher programs introduce a potentially large cost for the students that remain in public schools, as any sharp drop in public school enrollment will raise the fixed cost per pupil of running schools. For example, school facilities and staff that are efficient for 1,000 students in a school may no longer be efficient if enrollment were to drop to 800 or 900.

Voucher programs work like this: Parents who wish to send their kid to private school can receive public funding to cover part of the tuition or education-related expenses, rather than paying out of pocket. In states with vouchers programs, this added cost to government of paying for private educational expenses makes a big dent in state budgets—see examples here, here, and here. These programs also often entail fraud and abuse of funds and strip away funding for public schools. As a share of K–12 budgets, voucher spending accounted for as much as 26% in 2025, squeezing public schools of sorely needed funds. Moreover, recent reports have documented accounts of voucher funding getting used for high-end concert tickets and rideshare apps like Uber and Lyft. For wealthy parents in urban districts who were already planning to send their kids to private school, these slippery regulations and extra funding for education expenses are a feature, not a bug, of voucher programs. Vouchers are disproportionately taken up by students already attending private school, compared with those who consider a private school option when voucher laws get passed in their state.

For students in rural areas with no private school option, voucher programs simply mean there is less to spend on public schools, which leads to teacher shortages, fewer educational opportunities, and worse building maintenance. In rural communities with homeschooling or private school options, voucher programs impose an added cost to public education when students transition from public to private school.

We call this cost the fiscal externality of voucher programs, and it is borne by school districts, students, and their families when voucher-driven declines in student enrollment intersect with the fixed nature of many school costs. In rural districts, many key education costs—such as interest on bonds issued in the past, heating, electricity for school buildings, bus drivers, and even some staff—cannot easily adjust to student enrollment declines.

While public schools’ fixed costs do not decline when they lose students to voucher programs, their revenue does. Thus, when students in rural areas take up vouchers to leave public school for private school or homeschool, public schools have less revenue to cover the same level of fixed costs. The costs that can be adjusted—such as supplies or certain personnel—will get forced down due to shrinking school budgets. These variable costs are crucial for effectively educating children, meaning students who remain in public schools will pay the price of voucher program takeup.

This fiscal externality therefore leaves districts unable to deliver the same level of instruction to the remaining public school pupils. When students leave public schools in rural areas with voucher programs, there are fewer resources available on a daily basis to educate kids—fewer teachers and other staff members and fewer curriculum and education supplies. Education quality suffers.

How large is the fiscal externality that voucher programs impose on public schools in rural districts? Take the McComb Local School District in Ohio, which had 627 students in 2022 and is classified as a rural district according to the U.S. Census. Using EPI’s Fiscal Externality Calculator, we estimate that a 5% decline in enrollment would lead to an increased cost of $520 per pupil for the remaining students in the district, or a total of $309,530.

The key assumption is that there is some fraction of schools’ costs that is fixed and can’t be adjusted in the near term when enrollment falls. We assume that instruction and services costs (the cost of teachers and services like transportation, counseling, nurses, and school administrators) can only partially adjust to changes in enrollment. Specifically, we assume that when enrollment declines, instruction costs are only able to adjust by 50% of the enrollment decline, and service costs are only able to adjust by 20%. We assume that capital and building and maintenance costs can’t be adjusted at all. (Users can set their own adjustment rates for their school districts using the fiscal externality calculator here. The method behind this calculation is detailed in our report.)

Under these assumptions, aggregating all the rural Ohio districts using the rural categorization of school districts from the National Center for Education Statistics, a voucher-driven 5% enrollment decline would impose a fiscal externality of just over $206 million on Ohio public schools.

Rural districts have the most to lose when states enact voucher programs. For rural communities, vouchers are not a cost-free policy that simply expands education options for children—they are a subsidy for wealthy urban and suburban families at the expense of strong public schools. Voucher programs also introduce a large potential cost for the students that remain in rural public schools. The public spending declines associated with the introduction of vouchers will reliably cause significantly worse educational outcomes at a time when states should be spending more—not less—on public schools. States that promote voucher programs at the expense of funding for strong public education are signaling that rural students are not a priority. 

Key takeaways:

• Recent Democratic proposals to exempt broad swaths of the middle class from federal income taxes accept a damaging frame of taxes as a pure drain on affordability.
• But taxes aren’t a drain on affordability; they fund the public services and social insurance programs that make a decent life possible for middle-class families.
• Progressive taxes on the ultrarich and corporations are essential and should be the immediate priority, but they cannot sustain the public sector alone, let alone expand it in ways needed.
• Middle-class tax rates have fallen by a third since 1979, yet economic anxiety remains high. Tax-cutting has failed because it has left the private-sector drivers of inequality untouched and starved public services.

For decades, anti-tax politicians have tried to smuggle in large tax cuts for the ultrarich and corporations by loudly offering tax cut crumbs to the middle class. Key to this effort has been framing taxes as a pure drain on typical families’ ability to afford a secure economic life. Any success in this dishonest campaign to foster anti-tax sentiment is a disaster for working people—and that’s why some recent tax policy ideas from Democrats and the rhetoric around them are so deflating.

Two things are true about taxes in the United States. First, taxes on the richest families and corporations are far too low. Second, it is broad-based taxes on the middle-class that are the foundation of a functioning public sector and a decent society.

Progressive taxes on the ultrarich and corporations are mostly needed to reduce the potential gains to the rich and powerful from rigging the rules of markets. When the powerful rig these rules and hugely disproportionate shares of income concentrate at the top—like in the United States today—progressive taxes can also raise significant revenue.

But if sharply progressive taxes succeed in reducing the incentive for rigging the rules of markets and if other policies help lead to more broadly shared income growth in the country, this means that progressive taxes will raise a lot less revenue over time.

To be clear, this would be a victory for a better society. For example, the purpose of a carbon tax is to lower greenhouse gas emissions and if it’s highly successful, it will by definition stop raising much revenue. Progressive taxes aimed at reducing inequality will see the revenue they raise start to decline when they are their most successful. Right now, we do have deep inequality in the U.S. and progressive taxes will raise a lot of money—but we shouldn’t make the public sector’s resources dependent on this remaining true forever.

But more importantly, taxing only the very rich has never been the primary foundation of public-sector resources and can’t be going forward. The revenue needed to support programs that provide social insurance and income support (Social Security and Medicaid, for example), as well as public investment and services like highways, transit, and public education requires broad-based taxation. Without Social Security providing secure retirement, Medicare, Medicaid, and the Affordable Care Act providing access to health care, and public schools providing universal education, a decent life for the middle-class would be entirely unaffordable. And without middle-class taxes supporting all of these things, they would collapse.

If typical Americans lose faith that paying broad-based taxes to support public services and investments is a good deal, it will be a disaster for their ability to afford a decent life. Sadly, some recent Democratic proposals capitulate to this view of taxes as a “pure burden” rather than an investment in the country and its people.

Senators Chris Van Hollen (D-MD) and Cory Booker (D-NJ) have both floated ideas that would draw a line below which nobody would pay any federal income tax (Van Hollen’s line is $92,000 for a married couple while Booker’s is $75,000). Both proposals pay for this with tax increases on the rich. If these tax increases on the rich were standalone pieces of legislation, they’d be excellent. But they are instead paired with tax benefits that mostly miss the bottom of the income distribution. In Booker’s proposal, the gains from the higher standard deduction that zeroes out taxes for many are actually largest for families between the 60th and 80th percentiles, and gains persist on average through the 99th percentile. Van Hollen’s bill phases out the “alternative maximum tax” that zeroes out taxes for many, and the biggest gains hit in the middle of the income distribution, but the proposal still provides gains on average for families between the 60th and 80th percentiles.

Both proposals clearly aim to address the affordability challenge that politicians have seized on, but in doing so both frame taxes as a pure drain on affordability, with Booker even calling his the “Keep Your Pay Act.” But taxes aren’t a drain on affordability. They provide the resources needed to run the public sector, and the public sector in turn does a great deal to make life more secure and more affordable over people’s lifetimes.

Social Security and Medicare, for example, both rely on payroll taxes on workers’ wages. But they also provide income for these workers in retirement. Instead of draining affordability, these programs smooth income over the lifecycle to ensure working families can afford a decent life even when they can no longer work. Food stamps and Medicaid are financed by taxes and provide benefits to people who otherwise would not be able to afford the most basic necessities: food and health care. The same people who receive Medicaid and food stamps in one era of their lives will contribute to them through taxes in other periods when they have found steady work. Again, the taxes collected are recycled back into families’ incomes in ways that minimize suffering and severe affordability crises throughout their lives.

State and local taxes—often borne quite heavily by the broad middle class—pay for public education. This education—both K–12 and higher education—is incredibly valuable and necessary for anyone operating in modern economies. Without the taxes to support education, families would have to dig into their own pockets to pay for private schooling, and it would be delivered less efficiently and much less equitably.

Other taxes finance infrastructure and other key public goods and services, without which life would be harder and more expensive for most families.

Cutting taxes even fails on the crass political grounds of buying voters’ short-term goodwill. It’s often underrecognized (mostly, again, because of conservative campaigns to hide this fact), but taxes for the middle class have been cut a lot in recent decades. Figure A below shows the percentage point change in tax rates of households at different parts of the income distribution between 1979–2019. We stop at 2019 to compare equivalent points of the business cycle. Tax rates tend to fall sharply during recessions, which can obscure the full extent of legislative changes to tax rates. Further, cutting taxes temporarily during recessions can make some sense—tax cuts are one form of fiscal stimulus that can be used to fight recessions (unless these tax cuts are quite well-targeted on low- and moderate-income families, they tend to be less efficient stimulus than spending measures).

Figure A

The largest tax cuts have gone to the bottom fifth of households—a key policy victory of recent decades. The expansion of refundable tax credits like the Earned Income Tax Credit and the Child Tax Credit—credits that are paid directly to lower-income families even if their amount is greater than the families’ tax liability—have essentially made the problem of taxing families into poverty almost nonexistent. These tax cuts should clearly be kept. But all households, not just those with very low incomes, have seen sizable tax cuts. Tax rates for households in the middle of the income distribution have been cut by a third since 1979.

And yet, does anybody feel like this tax-cutting has led to most U.S. households feeling great about their place in the economy and their prospects for affording a decent life today? Do these voters express warm feelings about the policymakers from both parties who provided these middle-class tax cuts?

The tax-cutting strategy has failed to make these households happy for two reasons. First, it leaves the private-sector drivers of inequality untouched, and as governments have collected less in taxes, employers and corporations have contributed less to middle-class families’ wages. Second, lower taxes have starved public-sector capacity and led to a degradation of public services. Strangely, the newly fashionable “abundance” movement often frames this degradation as a problem of public-sector excesses, but it’s clearly driven by disinvestment. In short, middle-class families value public services and the decades-long campaign to cut taxes has harmed the ability to provide them. The lessons for today’s tax debates should be clear.

The failure of tax-cutting to foster economic security and happiness is not all that surprising for scholars of U.S. attitudes toward taxes, who argue that Americans are not universally anti-tax. Instead, Americans view paying taxes as a patriotic good and a moral obligation. But they are angry about paying their taxes when they think others are shirking their part of the social contract, particularly when they think the richest people and corporations aren’t paying their fair share.

Because we are starting with such high levels of inequality and because of this public cynicism about the rich ever being forced to pay their fair share, the first priority—by far—for policymakers today should be to enact significant stand-alone tax increases on the ultrarich and corporations. The revenue raised solely from the ultrarich could close today’s fiscal gap, the difference between today’s budget deficits and what is needed to put them on a sustainable path going forward. And this act would convince the rest of Americans that the ultrarich are not always prioritized in policymaking and would make future debates about the costs and benefits of higher taxes for higher levels of public goods much healthier.

But we can’t run a decent society based on just taxing the rich and telling everybody else that taxes are an unfair drain. Oliver Wendell Holmes famously said that taxes are the price you pay for civilization. But if the taxes are paid only by the rich, we will get the civilization they want. That doesn’t seem good enough to me.