Monday, April 4, 2011

READ: U.S. Supreme Court Decision On Arizona Tax Credits Opens Up Way For Government To Help Any Private Organization

Here is a copy of the 5-4 Opinion handed down by the U.S. Supreme Court today on the constitutionality of Arizona's private school tuition tax credit program.  The Court decided that the taxpayer plaintiffs did not have the legal standing to file the legal action;  the Justices thus sidestepped a ruling on the substance of the law which permits taxpayers - individuals and corporations - to designate some of their taxes to private schools.

Reading the syllabus of the Court's opinion is a quick way of getting to the crux of the opinion.  I recommend paragraph (c) of that syllabus (page 3 of the pdf document linked above).  It is clear that the majority (Justice Kennedy writing) believes that the tax credit gives the choice to send money to private schools to the individuals, and that governmental choices are the only ones that taxpayers can challenge.

There is no syllabus for the dissenting opinion (written by Justice Kagan), so looking at her conclusion is the easiest way to understand the dissent. About the majority opinion, Kagan writes: "The Court’s opinion thus offers a roadmap—more truly, just a one-step instruction—to anygovernment that wishes to insulate its financing of religious activity from legal challenge."

"Silliness" is how attorney for the plaintiffs, Paul Bender, describes the ruling to the Arizona Republic reporter.  It is too late for Arizona legislators to propose new bills (though they can still offer strike-everything amendments), but it will be interesting to see what the reaction will be at the state Capitol. 

We welcome your comments about this post. Or, if you have something unrelated on your mind, please e-mail to info-at-arizonaspolitics-dot-com. Thanks.


Phoenix Justice said...

I wonder if the Supreme Court would have found that the plaintiffs had "standing" if it were gay or pro-choice organizations being funded through the use of tax credits. I am sure the conservative justices would have had no problem allowing the case to proceed to trial.

Mitch M. said...

Thanks, Phx Justice! I think you - and, most everyone - knows the answer to your thought! And, I have a feeling that some state (other than Arizona) will develop a tax credit program that may lead to a definitive answer.

Recurring thought, related to yours, which I haven't gone back to check yet: Are they going to be able to restrict this opinion to tax credits with religious implications, or are all tax credits now above citizens' challenge?

Unknown said...

“‘The party who invokes the power [of the federal courts] must be able to show not only that the statute is invalid, but that he has sustained or is immediately in danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers in some indefinite way in common with people generally.’”

Seems pretty much irrefutable to me.. No matter
your politics or social inclinations.

Mitch M. said...

Thanks for commenting, Tra. Your comment got me to revisit this opinion and to think about it some more.

If I understand you correctly, you're quoting the general rule of the concept of standing from the 1923 Frothingham case.

However, my reading of the majority's opinion is that the Supreme Court was being asked to consider whether the plaintiffs had standing to challenge the STO program under the Flast exception to Frothingham. The Flast decision was a 1968 Supreme Court decision which carved out an exception to provide that a taxpayer DID have standing to challenge.

I call your attention to the majority's opinion (beginning on page 10 of the opinion, page 14 of the pdf document). The two conditions in Flast that must be met are (1) a "logical link" between taxpayer status and the type of legislative enactment; and (2) a "nexus" between taxpayer status and "the precise nature of the constitutional infringement alleged". In Flast, the challenged act was to collect/spend tax dollars and the constitutional infringement was specifically the Establishment Clause. (The present opinion reiterates the interesting history lesson which the Court set forth in Flast about James Madison and the intent of the framers in setting forth the Establishment Clause; worth reading, on pp. 12-14 of the opinion.)

So, the present Court found that this case did not fall under the Flast exception simply because it found that the nature of a tax credit is different enough from an expenditure of the government.

Basically, the Court found that in eliminating the middleman (the govt), the government can legislate monies to go religious schools without being challenged by taxpayers.

And obviously, the decision is very refutable. Witness the 5-4 split of the Justices. Witness the fine line that reasonable people could disagree on where it should be drawn - no matter their politics or social inclinations.

tra said...

"Basically, the Court found that in eliminating the middleman (the govt), the government can legislate monies to go religious schools without being challenged by taxpayers."

Mitch, respectfully disagree.. The STO statute
does not give funds to religious schools. It permits taxpayers to take credit for monies sent to the STOs. Some 2/3 of the STOs are secular not religious.

Am I injured because I still drive my gas guzzling SUV and another taxpayer receives a tax credit for driving an electric vehicle?

Would I have standing if I brought a lawsuit?

BTW Thanks for this blog.

Mitch M. said...

Thanks again, Tra. (I was hoping you were a regular reader of the blog and/or would come by to see if I had replied.)

I liked your gas guzzler analogy. Unfortunately, I think your previous paragraph highlights the flaw in using a secular - though some might say environmentalism is akin to religion - tax credit example.

You still appear to be forgetting about the Supreme Court's Flast exception. One of the conditions to meet that exception (that would thus permit standing) is the nexus to the precise nature of the alleged constitutional infringement. In the STO case - as you point out - we have an alleged infringement of the Establishment Clause of the First Amendment. In the electric vehicle case, we would not come close to meeting that condition. Therefore, you would not have standing.

In fact, if anything, the discussion of tax credits for electric vehicles allows us to realize and focus on the fact that the Legislature's enactment of such a credit IS an exercise of government's authority to tax and spend, and to set our state's priorities. The state govt is using its power to encourage the purchase of electric vehicles (to reduce dependence on foreign nations, to reduce pollution, or for whatever public policy purposes). It could have exercised this authority and this priority by spending money on electric vehicles, but it chose the tax credit as the most efficient way. (Check out Art. 5 of Chap. 10 on this page for the list of individual tax credits available under Arizona's tax code, and Art. 6 of Chap. 11 for the corporate list: )

Mitch M. said...

Likewise, our state government wanted to exercise its authority to bolster private schools - intentionally including private religious schools. However, its options are more limited - because of the Constitution - and the need for creativity has become higher and higher. This STO tax credit system was the result.* And, it has accomplished the goal of aiding private, religious schools.

The Supreme Court has again avoided ruling directly on the substantive issue of whether the tax credits violate the Establishment Clause, although this time they clearly would LIKE TO state that it does not. Likely, they would have lost their majority, which is why they expressed it in the lack of standing (i.e. not falling under the Flast exception) context.

Sooooo, I stand by my "eliminating the middleman" analogy. And, while my opinion of the Supreme Court's decision is now likely to be crystal clear to anyone reading this, I hope that I have also accomplished my stated objective of presenting material in an objective fashion - without pushing my opinions or beliefs, and presenting supporting information wherever necessary.

Thanks again for the civil discussion and your readership. And, I encourage other readers to jump in in a similarly civil fashion.

* By the way, you noted that "some 2/3 of the STOs are secular not religious." Not only is your figure slightly off, but it is slightly misleading. According to my review of the 53 STOs recognized by the state in 2010, at least 21 are religious in nature. (It may be more, but I only counted as "religious" ones that had obvious religious references in their name.) That is approximately at least 40%.

More importantly, the behemoths in the STO business are the "Arizona CHRISTIAN STO" and the "CATHOLIC Tuition Org of the Diocese of Phoenix". Together, they account for more than 38% of the total donations. Add in the amounts gathered by the other 19 obviously-religious STO's and you have nearly $27 million (at least)of the $43 million total going to religious schools. That is at least 62% of the total.

By the way, those numbers are only on INDIVIDUAL donations to the STO's; the 2010 report on CORPORATE donations is not yet available. However, it appears that approximately $4 million in corporate tax credit donations to religiously-affiliated STO's were reported in 2009.

Source: ADOR's 2010 report on individual donations to private STO's, Executive Summary.