On April 4, 2011, the U.S. Supreme Court decided a consolidated case, Ariz. Christian Sch. Tuition Org. v. Winn, 2011 U.S. LEXIS 2612 (U.S. Apr. 4, 2011), Dkt. No. 09-987, and Garriott v. Winn, Dkt. No. 09-991, involving three of the most controversial subjects facing courts today-tax, education, and religion. In its decision, however, the U.S. Supreme Court avoided the merits of many arguments relating to these issues by holding that those challenging the constitutionality of an Arizona tuition tax credit program based on the Establishment Clause of the First Amendment lacked standing to challenge the program. Reversing a decision of the Ninth Circuit, which had held that the program did violate the Establishment Clause, the U.S. Supreme Court has let stand the Arizona program, which entitles taxpayers to dollar-for-dollar income tax breaks for donations made to qualifying school tuition organizations.
Arizona Christian School Tuition Organization v. Winn involved Arizona's school choice tuition tax credit program, under which taxpayers can elect to have money contributed to a scholarship tuition organization (STO) when their state tax return is filed. The program permits resident individuals and businesses in the state to make contributions for which they receive a tax credit. The credit can be taken against the personal income tax, the corporate income tax, or the insurance premiums tax. In the first year in which the program was run (1998), 85 percent of the scholarship money was awarded to students who attended religious schools. By 2009, the program had grown significantly, and the 85 percent figure was reduced to an estimated 70 percent that was awarded to students in religious schools.
Supporters of the program argued that the state does not decide which schools benefit from the scholarship awards; rather, the program allows anyone to form a scholarship tuition organization. The fact that the bulk of the STO money benefits religious schools reflects donor preference and parental demand, not state action. Those who argued in support of the constitutionality of the program noted that educational opportunities available to Arizona taxpayers include more than 600 charter schools. Thus, they argued, the state was not supporting the establishment or support of religious educational institutions, but providing a means by which taxpayers could make alternative educational decisions.
Opponents of the program argued that, although the Arizona program does not provide a direct benefit to religious institutions, the state is attempting to accomplish through indirect means what it cannot accomplish using direct means. Their argument is that, since the state is precluded from directly using taxpayer funds for religious institutions, it is similarly prohibited from using what is essentially a replacement program, the tuition organization approach.
Although the Ninth Circuit agreed with those who opposed the program, and found the program to be in violation of the Establishment Clause, the U.S. Supreme Court decided to hear the case in its 2010-2011 year. In oral arguments held in November 2010, the U.S. Supreme Court redirected many of the substantive arguments, and focused much of its questioning, not on the merits of the program, but on the standing issue.
The approach taken by the Court in this case is similar to that taken in the 2004 Cuno case. In Cuno v. Daimler Chrysler, Inc., 386 F.3d 738 (6th Cir. Ohio 2004), a Sixth Circuit case in which the U.S. Supreme Court vacated a judgment regarding the constitutionality of economic development credits in part for lack of standing, the Court opined that taxpayers do not have an inherent right to challenge how their tax money is spent, and therefore those taxpayers wanting to challenge a tax law bear the burden of establishing nexus between their status as taxpayers and the legislative enactment being challenged.
Although taxpayers generally lack standing to challenge tax laws, absent situations in which they can demonstrate injury, the plaintiffs in Arizona Christian School Tuition Organization v. Winn focused on a narrow exception to this doctrine created in Flast v. Cohen, 392 U.S. 83 (U.S. 1968), which gives taxpayers an opportunity to challenge laws that provide governmental support for religious activity. The plaintiffs argued that since most of the funds donated under the tuition tax credit program go to religious schools, and some of the STOs have religious missions, the program violates the Establishment Clause. The majority opinion in Arizona Christian School Tuition Organization v. Winn rejected this argument, and returned to the general doctrine that taxpayers lack standing, absent demonstrated injury.
Justice Elena Kagan, who had expressed concern on oral argument, posited that the majority's position allows the state to do in a convoluted tax credit program what it could not do in a program that directly provides support for those private schools. Justice Kagan's dissent questioned whether the majority's determination that the plaintiffs lack standing leaves the plaintiffs without recourse simply because the program accomplishes in an indirect way what it could not otherwise accomplish. The dissent argues that the majority elevates form over substance, and allows the legislature to do through this type of program what would clearly be unconstitutional if governmental funds were expended for similar purposes.
RELATED LINKS: For more on First Amendment challenges to state tax law, see
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