Coloradans have said no to higher education taxes, voting down Proposition 103 by a two-to-one margin. There was good reason for that decision. Total per-pupil spending in Colorado has more than doubled since 1970, even after accounting for inflation. The same is true at the national level. Over that same period, student achievement at the end of high school has stagnated in math and reading and declined in science. So raising taxes has a long record of educational failure. Surprisingly enough, lowering them actually works.

Since 2002, Florida has been cutting taxes on businesses that help poor children attend private schools. If a business makes a donation to a non-profit K-12 scholarship organization, it receives a tax credit in the amount of the donation. The donation thus costs the business nothing, but the tuition assistance it provides throws open a whole new range of educational choices for low-income families.

The academic impact of the program has been studied from two perspectives: what does it do for students who remain in public schools, and what does it do for those who receive scholarships and move to private schools? Both groups of students gain. Public schools face increasing competition to attract and retain students and so they redouble their efforts, with their students’ scores improving significantly as a result. Meanwhile, the students who actually receive scholarships and attend non-government schools learn more than comparable students in the public schools.

At first this might seem like a win-win situation. But, at the risk of plagiarizing actor Charlie Sheen, it is in fact a win-win-win. The third group to benefit from Florida’s program is taxpayers. That’s because, for every dollar the education tax credit reduces state revenues, it saves the state $1.49 — according to an official study by the legislature’s accountability agency. That is because educating children in the private sector is quite a bit less expensive than doing so in the public sector. So the program not only improves educational outcomes for all concerned, it generates a 50 percent annual return on investment — a remarkable boon in difficult economic times.

Coloradans may well wonder if there would be legal hurdles to adopting such a program in their state. After all, a private school voucher program was struck down by the Colorado Supreme Court in 2004, and a new voucher program in Douglas County was halted by a district court just last summer.

As it happens, an education tax credit program would be unlikely to generate a lawsuit, and would almost certainly be upheld if a suit were filed. Ten education tax credit programs are already operating around the country, only a handful of which have ever had suits filed against them — and every one of those programs was ultimately upheld. Most recently, the United States Supreme Court upheld a K-12 scholarship tax credit program in Arizona similar to the one in Florida.

Writing that decision, Justice Kennedy explained why these programs have consistently survived legal challenge: “Awarding some citizens a tax credit allows other citizens to retain control over their own funds in accordance with their own consciences.” In other words, no one is obliged to participate in a scholarship tax credit program, and those who choose to do so are free to give their money to whichever scholarship-granting organization they deem best. Meanwhile, those who do not participate continue to pay their taxes as they did in the past — except that their taxes can be lowered given the savings generated by the program.

Education tax credits can also be offered directly to middle-income families, cutting taxes on parents who shoulder the cost of their own children’s education. Such direct education tax credits already exist in Illinois and Iowa, and are in use by hundreds of thousands of families.

Both the savings of education tax credits and the costs of public schooling add up quickly. The Colorado Department of Education’s most recent budget document reveals spending of about $13,000 per pupil in 2009-10, notes Independence Institute scholar Ben DeGrow. So it now costs $169,000 to put a child through the K-12 system — far more than double the $77,000 price tag of the mid-1970s, adjusting for inflation.

The defeat of Proposition 103 suggests that Coloradans feel they haven’t got much for the extra $90,000 per student they’re now spending on a K-12 education. And it suggests that they might prefer a reform measure that has been proven to both improve academic achievement and save taxpayers millions of dollars a year.

Andrew Coulson directs the Cato Institute’s Center for Educational Freedom and is the author of Market Education: The Unknown History.