Private Education Tax Credits Backed by U.S. Supreme Court

The U.S. Supreme Court put new limits on the power of citizens to challenge government programs as unconstitutionally promoting religion, permitting an Arizona tax credit aimed at helping cover private-school tuition costs.

The justices, voting 5-4, today said opponents lacked “standing” to challenge the 14-year-old program, which gives tax credits for donations to organizations that provide private-school scholarships. The opponents faulted the program for relying on religious organizations that require their recipients to enroll in sectarian schools.

The high court must avoid becoming “a council of revision, conferring on itself the power to invalidate laws at the behest of anyone who disagrees with them,” Justice Anthony Kennedy said for the majority.

The ruling marks the second under Chief Justice John Roberts to insulate government programs from church-state challenges. The court in 2007 threw out a suit over then-President George W. Bush’s faith-based initiatives office.

The case split the court along familiar lines, with the court’s five Republican appointees -- Roberts, Kennedy and Justices Antonin Scalia, Clarence Thomas, and Samuel Alito -- in the majority.

The Arizona tax credit applies after taxpayers have computed how much they owe for the previous year. At that point individuals can send as much as $500 to so-called school tuition organizations, reducing their tax liability by the same amount.

Right to Challenge

The Constitution says federal courts can act only in “cases” and “controversies” -- that is, to resolve specific legal disputes affecting the parties.

Since 1968, when the court issued a decision known as Flast v. Cohen, individuals have possessed the right to challenge statutes that direct government money to be spent for religious purposes. Flast marked an exception to the general rule that Americans can’t go to court to contest how their tax dollars are spent because they don’t have enough of an individual stake in the outcome.

The majority today said Flast didn’t apply because the Arizona case involved a tax credit, rather than an appropriation of government dollars. Kennedy said the money at issue belonged to the taxpayers claiming the credit.

“Contributions result from the decisions of private taxpayers regarding their own funds,” Kennedy wrote. “Objecting taxpayers know that their fellow citizens, not the state, decide to contribute and in fact make the contribution.”

Obama and Kagan

In reaching that conclusion, the majority agreed with the contentions of President Barack Obama’s administration, which joined Arizona in defending the program.

Justice Elena Kagan, who previously served as Obama’s top Supreme Court lawyer, wrote the dissenting opinion, accusing the majority of creating a “novel distinction” between a tax credit and a government appropriation.

“Either way, the government has financed the religious activity,” Kagan wrote in her first dissenting opinion since joining the court in August. “And so either way, taxpayers should be able to challenge the subsidy.”

She said the ruling “devastates taxpayer standing” in church-state cases. The opinion “offers a road map -- more truly, just a one-step instruction -- to any government that wishes to insulate its financing of religious activity from legal challenge,” Kagan wrote.

Justices Stephen Breyer, Ruth Bader Ginsburg and Sonia Sotomayor joined Kagan’s opinion.

School Choice

In resolving the case on standing grounds, the justices opted not to decide directly whether the tax credit violated the Constitution. A federal appeals court had let the lawsuit go forward.

Supporters of the Arizona program said the ruling may embolden state legislatures around the country to enact similar “school choice” programs.

“The decision is a very good one for anyone who wants to see serious school reform,” said John Kramer, a spokesman for the Institute for Justice, an Arlington, Virginia-based group that helped defend the Arizona tax credit.

Opponents of the Arizona program said the ruling will give governments a freer hand to direct money to religious schools without risking a lawsuit.

“The court, with the full support of the Obama administration, has slammed the courthouse door in the face of Americans who don’t want their tax dollars to subsidize religion,” said Reverend Barry W. Lynn, executive director of Americans United for Separation of Church and State.

The Supreme Court ruled in 2002 that tax-funded school vouchers are constitutional so long as parents have a “genuine choice” not to send their children to religious schools.

The cases are Arizona Christian School Tuition Organization v. Winn, 09-987, and Garriott v. Winn, 09-991.

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