Law & Courts

High Court Rejects Challenge to Religious-School Tuition Tax Credit

By Mark Walsh — April 04, 2011 2 min read
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A divided U.S. Supreme Court on Monday ruled that taxpayers who opposed an Arizona tax credit that benefits religious schools lacked legal standing to challenge it because any financial benefit to religion under the program is not the result of government spending choices.

“When the government collects and spends taxpayer money, governmental choices are responsible for the transfer of wealth,” Justice Anthony M. Kennedy wrote for the 5-4 majority in Arizona Christian School Tuition Organization v. Winn (Case No. 09-987). “Here, by contrast, contributions result from the decisions of private taxpayers regarding their own funds.”

The court ruled in a challenge to Arizona’s 13-year-old tuition-aid plan, under which taxpayers can receive a dollar-for-dollar credit of up to $500 (or $1,000 for married couples) on their state income-tax returns for donations to “school tuition organizations,” or STOs.

Such tuition groups may limit their grants to students who will use them at religious schools. In 2008, scholarship awards under the plan totalled some $54 million, according to the state. The Arizona Republic newspaper reported that 93 percent of the aid that year went to students in religious schools.

Taxpayers generally may not challenge government spending decisions based on taxpayer status alone, though a 1968 Supreme Court ruling, Flast v. Cohen, created an exception that allows taxpayers to challenge a program of direct grants to religious organizations.

Justice Kennedy said the challengers did not meet the requirements for taxpayer standing under Flast.

“The STO tax credit is not tantamount to a religious tax or to a tithe and does not visit the injury identified in Flast,” Kennedy said. “It follows that [the challengers] have neither alleged an injury for standing purposes under general rules nor met the Flast exception.”

Justice Kennedy’s opinion was joined by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas, and Samuel A. Alito Jr.

While the majority’s decision does not decide the constitutional merits of the tuition tax credits, the ruling effectively shields the plan from any further legal challenge.

Justice Elena Kagan, in a sharp dissent joined by Justices Ruth Bader Ginsburg, Stephen G. Breyer, and Sonia Sotomayor, said the majority opinion “devastates taxpayer standing in establishment clause cases” and offers a “roadmap ... to any government that wishes to insulate its financing of religious activity from legal challenge.”

“And by ravaging Flast in this way, today’s decision damages one of this nation’s defining constitutional commitments,” Justice Kagan added, “to limit ... the government’s power to subsidize religious activity.”

UPDATE: My fuller story for Education Week is now available here.

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A version of this news article first appeared in The School Law Blog.