Split U.S. Supreme Court OKs Arizona tax break that mainly benefits religious schools

4/4/2011

WASHINGTON  — A Supreme Court divided along ideological lines said Monday that ordinary taxpayers cannot challenge government programs that use tax breaks to direct money to religious activities.

The court ruled 5-4 in favor of an Arizona scholarship program for private schools that has mainly benefited religious schools in offering a dollar-for-dollar reduction in the income tax bill of people who participate.

The decision cheered supporters of school choice and dismayed civil libertarians who said it will be harder to use federal courts to claim violations of the Constitution’s prohibition on direct government aid to religion.

Justice Anthony Kennedy wrote the court’s majority opinion that held that the Arizona taxpayers who challenged the program have no stake in the dispute that would allow them to take their case to federal court.

For more than 13 years, Arizona has allowed residents to send up to $500 to a tuition scholarship organization that they would have otherwise paid the state in taxes on their incomes. The state has passed up nearly $350 million in income tax payments over the life of the scholarship program, and the bulk of that money has gone to private religious schools.

But because the program operates as a tax credit, instead of a direct appropriation of government money, “contributions result from the decisions of private taxpayers regarding their own funds,” Kennedy said in an opinion that was joined by the four conservative justices.

The taxpayers who object to the program have no connection to the money involved, Kennedy said. The Obama administration argued aggressively for the outcome the court reached Monday; it also took the view that the challengers had no standing to sue.

In dissent, Justice Elena Kagan said the distinction was meaningless. “Appropriations and tax subsidies are readily interchangeable,” Kagan said in her first dissenting opinion since joining the court in August. “What is a cash grant today can be a tax break tomorrow.”

And she predicted that lawmakers elsewhere would adopt the “roadmap” Kennedy provided to subsidize religion without facing judicial review. The court’s other three liberal justices signed on to her dissent.

Supporters of the Arizona program said they hope that Kagan is right. Monday’s ruling and a 2002 decision that upheld the use of vouchers “should give state legislatures wide discretion in adopting school choice programs,” said Tim Keller, executive director of the Arizona chapter of the Institute for Justice. The group represented both religious and secular scholarship organizations that receive the tax money.

“School choice programs are not about aiding religion. They’re aimed at helping individual families,” Keller said.

Monday’s ruling has no effect on the more common voucher programs. Arizona adopted its unusual arrangement because its state constitution prohibits direct aid to private schools, a lawyer for the state told the court during arguments in November.

The American Civil Liberties Union led the challenge to the program.

There is a general prohibition on taxpayer challenges to the government spending of tax revenue. But a 1968 Supreme Court decision created a narrow exception to allow for challenges to programs that promote religion.

In this case, the San Francisco-based federal appeals court agreed with the ACLU that the lawsuit could proceed under that high court ruling. Kennedy’s opinion Monday said otherwise.

“It’s a very disappointing decision that ignores precedent, defies logic and undermines the role of the courts in preserving the core constitutional principle that government may not subsidize religion,” said Steven R. Shapiro, the ACLU’s legal director.

Shapiro said the only bright spot was that the court rejected a more significant outcome, overruling the 1968 decision.

Justice Antonin Scalia, in a brief opinion joined by Justice Clarence Thomas, urged the court to “repudiate that misguided decision.”

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