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Supreme Court Slams The Courthouse Door On Taxpayers’ Right To Challenge Tax Credits For Religious Schools

The U.S. Supreme Court has issued an opinion that will make it a lot easier for the government to subsidize religion.

The justices, in a 5-4 decision on April 4, ruled that taxpayers have no inherent right to go to court to challenge tax credits that support religious schools.

In the majority opinion, Justice Anthony M. Kennedy said taxpayers do not have “standing,” the legal right to sue, over an Arizona tuition tax-credit scheme that allows taxpayers to contribute to so-called school-tuition organizations (STOs). These groups then use the “donation” to pay for tuition for students at religious and other private schools. Those who donate to the STOs receive a 100 percent dollar-for-dollar tax credit in return.

Kennedy, joined by Chief Justice John G. Roberts and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito, said the tax breaks differ from a direct subsidy because the money comes from the wallet of the person making the donation, not from the state. (Because the court threw the case out for lack of standing, it did not determine the constitutionality of Arizona’s tuition tax-credit program.)

The court majority did keep open the option that persons other than taxpayers may still be able to challenge at least some tax credits and exemptions that promote religion. For example, if the government creates a tax exemption that only benefits religious organizations, non-religious non-profit groups would be able to challenge the law.

But that’s little consolation, since the Arizona program cannot be challenged by anyone under this precedent. The scheme primarily benefits religious schools, but it also subsidizes a handful of secular private schools.

Americans United for Separation of Church and State condemned the Arizona Christian Tuition Organization v. Winn decision.

“This misguided ruling betrays the public school system by directing tax dollars to religious schools,” said Barry W. Lynn, executive director of Americans United, which filed a friend-of-the-court brief in the case. “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.”

The Obama administration not only argued in favor of the Arizona funding scheme, it advocated denying taxpayers’ right to challenge the program in court. The Solicitor General’s Office at the U.S. Department of Justice requested and was granted 10 minutes to argue in favor of the plan during oral argument before the justices.

Justice Elena Kagan wrote her first dissenting opinion in this case. Joined by Justices Sonia Sotomayor, Stephen G. Breyer and Ruth Bader Ginsburg, she pointed out that distinguishing between tax breaks and direct aid leaves the door open for wide-ranging government subsidies for religion.

“Cash grants and targeted tax breaks are means of accomplishing the same government objective,” Kagan wrote. “Taxpayers who oppose state aid for religion have equal reason to protest whether that aid flows from one form of subsidy or the other…. From now on, the government need follow just one simple rule – subsidize through the tax system.”

The Arizona tuition tax-credit program was set up 14 years ago. Legislators concocted the scheme as a way to sidestep state law and create a backdoor voucher program. (Voucher subsidies were blocked by the Arizona Constitution, which includes strong protections barring taxpayer funding of religious and other private schools.)

The program has primarily benefited religious schools. In 2009, 91.4 percent of the $52 million collected went to sectarian institutions. Since the scheme passed in 1997, $349 million in taxes has been diverted from the state’s General Fund to private schools.

AU’s Lynn said the case was about the Constitution’s promise that the government will not fund religion and every American’s right to seek justice when this principle is violated.

“That’s all we can ask for – a chance to make an argument and have our day in court,” said Lynn. “Sadly, a majority of justices has taken away that option, leaving open only a narrow window to challenge such outrageous tax schemes.”