Agreeing with the Obama administration's solicitor general, the Supreme Court ruled Monday that taxpayers have no right to challenge a tax credit for violating the Establishment Clause. The high court split 5-4 along idealogical lines with conservatives in the majority.
A tax credit reduces your tax bill dollar for dollar. $500 in credits reduces your tax bill by $500, in turn reducing the state's tax revenue by the same amount.
Justice Anthony Kennedy, writing for the five-justice majority, said that taxpayers may challenge a direct legislative appropriation for religious schools, but not a tax credit. He conceded that a tax credit and a direct government expenditure "may have similar economic consequences," but he said a tax credit is different because any injury to the disagreeing taxpayer is "speculative," and the money is directed by private individuals, not the state.
Arizona State University law professor Paul Bender, who represented the Arizona taxpayers, says the court's opinion defies reality. "The state has a budget deficit of a billion dollars, so when $100 million doesn't come into the Treasury, the rest of the state's taxpayers have to make up for that," he says. "The idea that [the tax credit] doesn't affect the rest of the state's taxpayers is just fantasy."
At issue was the taxpayer's standing to hold the government to its constitutional obligations. Normally, an individual can sue the government only by alleging a personal injury from its misconduct, not because he believes it simply is overstepping its authority.Emphasis added.
But in 1968, the Supreme Court created an exception for religious subsidy cases, observing that otherwise it would be virtually impossible to enforce the Establishment Clause.
Writing for the majority, Justice Anthony Kennedy explained that the exception applied only to government appropriations intended to subsidize religion. "A dissenter whose tax dollars are 'extracted and spent' knows that he has in some small measure been made to contribute to an establishment [of religion] in violation of conscience," Justice Kennedy wrote. In contrast, a tax credit implicates funds never collected in the first place. "When the government declines to impose a tax," Justice Kennedy wrote, "there is no such connection between dissenting taxpayer and alleged establishment."
In her dissent in the case, Arizona Christian School Tuition Organization v. Winn, No. 09-987, Justice Kagan said the majority’s position was an elevation of form over substance. “Taxpayers experience the same injury for standing purposes,” she wrote, “whether government subsidization of religion takes the form of a cash grant or a tax measure.”
She offered examples. “Suppose a state desires to reward Jews — by, say, $500 per year — for their religious devotion,” she wrote. Would it matter to taxpayers offended by the practice whether the reward came in the form of a government stipend or a tax credit?
“Or assume,” she wrote, “a state wishes to subsidize the ownership of crucifixes” in one of three ways. It could purchase them in bulk and distribute them; it could reimburse buyers with a check; or it could pay with a tax credit.
“Now, really — do taxpayers have less reason to complain if the state selects the last of these three options?” Justice Kagan asked.
Yet those who want to not spend and yet support religious schools may also be relying on the illusion Kagan identifies. From the NPR report:
"It is mostly Republicans who support these aid-to-religion programs, and Republicans don't want to raise taxes to pay for vouchers," Laycock says. "But if they can do it through a tax credit, they can support religious schools and claim it's a tax cut all at the same time."In it's amicus brief the Obama administration wrote,
Unlike the statute in Flast (and unlike the Virginia statute to which James Madison objected in his famous Memorial and Remonstrance Against Religious Assessments, Flast, 392 U.S. at 103), the Arizona statute at issue here does not make grants or disburse government funds, and it does not direct the transfer of government money to religious institutions. Rather, the statute merely provides a beneficial tax consequence for private citizens who donate their own funds to STOs of their own choosing. The money involved never enters the State’s treasury, and the portion of it that goes to religious institutions does so only due to the unfettered discretionary choices of private individuals.