Lawsuit Seeks To Overturn Arizona Tax-Credit Law

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A coalition of Arizona taxpayers and education groups has launched a legal battle against a new state law that coalition members say amounts to a backdoor attempt to create a school voucher system.

The plaintiffs filed the lawsuit last week in the Arizona Supreme Court, rather than a trial court, in an effort to gain an expedited ruling on the constitutionality of the law, which then-Gov. Fife Symington signed in April. Oral arguments are scheduled for December; the law is slated to take effect in January.

It grants taxpayers up to $500 in state income-tax credits for donating money to nonprofit groups that, in turn, give scholarships to students to attend private schools, including religious ones.

The law also offers taxpayers up to a $200 credit for money they pay to public school for extracurricular activities that require a fee, such as band or sports teams. ("Ariz. Law Grants Tax Credit for Tuition-Aid Donations," April 16, 1997.)

"The direct voucher plans seem to be faltering in court, so more and more states will be interested in looking at these backdoor methods," said Robert Boston, a spokesman for the Washington-based Americans United for Separation of Church and State, one of the groups supporting the lawsuit. The suit names as the defendant Arizona's department of revenue, the agency charged with enforcing state tax laws.

Arizona's law is unusual, legal experts say, because it is a hybrid. Some states allow parents who send their children to private schools to take tax deductions or credits for the tuition. And many nonprofit groups provide scholarships for low-income children who otherwise would not be able to afford private schools.

'Fairness and Freedom'

But Arizona's law offers an incentive for taxpayers to make donations to nonprofit scholarship organizations that provide benefits for more than one school. In fact, the law prohibits parents from taking a tax credit if their donations are to benefit their own children directly. And while taxpayers often claim deductions for charitable donations, Arizona's law offers a dollar-for-dollar credit for the amount of a specific donation.

Opponents of the law--including teachers' unions, the state school boards' association, parents, and some religious leaders--say it violates the Arizona and U.S. constitutions by creating a means of funneling public tax money into private and religious schools.

"It will shortchange public students by millions of dollars," said one plaintiff, the Rev. Jerry DeGrow of the Shepherd of the Hills United Methodist Church in Sun City West, near Phoenix. "And down the road it will enmesh religious schools in state regulations."

The law's supporters point to past court rulings that have upheld tax breaks to parents for private school tuition. They also blasted the plaintiffs for blocking what they say is needed school reform.

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