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Justices debate tax credit for religious schools

Arizona group says it violates Constitution

By Robert Barnes
Washington Post / November 4, 2010

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WASHINGTON — Deciphering the constitutional principle that government “shall make no law respecting an establishment of religion’’ is almost always a guarantee of a divided Supreme Court.

And so it was again yesterday as the justices reviewed an Arizona program that lets taxpayers send part of their state taxes to organizations that provide millions of dollars in scholarships to private religious schools.

The court’s liberal members sharply questioned whether the program is just a way for the state to provide tax money to religious schools and noted that it almost certainly would be unconstitutional if the contributions came directly from the state.

Conservatives indicated that the program offers just a different version of the widely accepted practice of providing tax breaks for people who make charitable contributions.

The Obama administration weighed in on the side of Arizona and argued that taxpayers challenging the program do not have the right to bring the lawsuit. So absolute was the government on the latter point that it seemed to take the nation’s former top appellate lawyer — now Justice Elena Kagan — by surprise.

Kagan told her former deputy, Acting Solicitor General Neal Katyal, that he was advancing a “silly and fictional’’ interpretation of the court’s past decisions on what taxpayers must prove before they can challenge a government spending decision.

For 13 years, Arizona has allowed residents to send up to $500 of what they owe the state in income taxes — $1,000 for a married couple — to a private “student tuition organization.’’

The organizations, which get about $55 million a year, provide scholarships to private schools. The organizations are allowed to limit scholarships to students at private religious schools.

Some taxpayers sued, saying the structure effectively forces parents who want the scholarships to send their children to religious schools.

Katyal told the justices that lower courts should not have let the taxpayer suit go forward. Because they did not participate in the program, he said, “not a cent, not a fraction of a cent’’ of their money went into any religious school’s coffers.

Taxpayers generally are not allowed to sue over government spending. But the court in Flast vs. Cohen in 1968 made an exception for spending alleged to violate the Establishment Clause.

“Isn’t the underlying premise of Flast vs. Cohen that the Establishment Clause will be unenforceable unless we recognize taxpayer standing?’’ Justice Ruth Bader Ginsburg asked.

Katyal said no, adding that he does not think any taxpayer had the right to challenge the Arizona program. But whether the money involved is even state money is the heart of the argument.

Paul Bender, who represented residents challenging the program, said it is different from a more traditional charitable donation, where the donor receives a tax deduction.

“When a taxpayer makes a charitable deduction, that charitable deduction is made from the taxpayer’s money,’’ he said. But the money at stake here is raised by the state income tax and owed to the state.

Some justices said they were not sure about such a distinction. “I must say, I have some difficulty that any money that the government doesn’t take from me is still the government’s money,’’ Justice Anthony Kennedy said.

The court already has ruled that parents may use government vouchers to send children to private secular and religious schools, and some conservative justices argued that Arizona’s program is no different.

But Bender said the difference is that with vouchers, the state gives money to parents, and they make the choice. In Arizona, he said, the money goes to the tuition organizations, some of which make it available to parents only if they send their children to religious schools.

Correction: This story contained a description of the program that could be misleading. As the story said, student tuition organizations are allowed to give scholarships exclusively to private religious schools if they wish. But student tuition organizations can also be established to benefit secular private schools.