Supreme Court Rules for Tax Credit for Private Schools

The Supreme Court has ruled in favor of an Arizona government program that provided tax credits to individuals who contribute to nonprofit groups that offer scholarships for private school students, including those at parochial schools.

The case, Arizona Christian School Tuition Organization v. Winn et al, involved a group of taxpayers who had sued over an Arizona law that gives tax credits for contributions to school tuition organizations, which then use the contributions to provide scholarships to students attending private schools, including religious schools.

Associate Justice Anthony Kennedy, writing for the majority, ruled Monday in favor of the school tuition organizations, saying that the lawsuit challenged a tax credit, as opposed to a governmental expenditure.

“Like contributions that lead to charitable tax deductions, contributions yielding [school tuition organization] tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations,” he noted. “Respondents’ contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence.”

Despite several earlier court rulings allowing taxpayers to sue on the basis of perceived religious discrimination in similar cases, the majority court opinion appeared to limit the concept of taxpayer standing. “The fact that respondents are state taxpayers does not give them standing to challenge the subsidies” under the Arizona law, Kennedy wrote. He was joined by Chief Justice John Roberts, and Associate Justices Antonin Scalia, Clarence Thomas and Samuel Alito.

The newest justice on the court, Elena Kagan, wrote her first dissenting opinion, arguing that the majority’s ruling went against precedents in similar cases. She was joined by Associate Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor.

“Today’s decision devastates taxpayer standing in Establishment Clause cases,” Kagan wrote. “The government, after all, often uses tax expenditures to subsidize favored persons and activities. Still more, the government almost always has this option. Appropriations and tax subsidies are readily interchangeable; what is a cash grant today can be a tax break tomorrow. The Court’s opinion thus offers a roadmap—more truly, just a one-step instruction—to any government that wishes to insulate its financing of religious activity from legal challenge.”