High court allows Ariz. religious-school tax break

Monday, April 4, 2011

WASHINGTON — The Supreme Court rejected a challenge today to an Arizona tax break that directs millions of dollars to private religious schools.

The justices, in a 5-4 ruling, said that Arizona taxpayers who filed a lawsuit to block the tax break have no legal claim because they are not forced to contribute to the state program that sends money to the religious schools.

Justice Anthony Kennedy wrote the Court's majority opinion, joined by Chief Justice John Roberts, Justices Antonin Scalia, Clarence Thomas and Samuel Alito.

Justice Elena Kagan dissented, along with Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor.

For more than 13 years, Arizona has allowed residents to send up to $500 to a tuition-scholarship organization that they would have otherwise paid the state in taxes on their incomes. The scholarship groups have received nearly $350 million, Kagan noted.

There are also organizations for private secular schools, but the bulk of the money has been directed to religious schools.

The major complaint about the law has been that state money has wound up in the coffers of religious schools.

But Kennedy rejected the idea that the money at issue belongs to the state. “Contributions result from the decisions of private taxpayers regarding their own funds,” he said.

The taxpayers who object to the program have an insufficient connection to the money involved to take their complaint to federal court, Kennedy said. The Obama administration argued aggressively for the outcome the high court reached today.

Kagan, in her first dissenting opinion since joining the Court in August, said that her colleagues in the majority had provided governments a roadmap to protect decisions to send money to religious activity from court challenges.

If the money comes from a traditional appropriation, someone might be able to sue over it, she said. But now the Court has instructed governments to structure these programs as tax breaks to prevent lawsuits.

“Appropriations and tax subsidies are readily interchangeable,” Kagan said. “What is a cash grant today can be a tax break tomorrow.”

Today's ruling has no effect on more common voucher programs, which the Court previously upheld. Arizona adopted its unusual arrangement because its state constitution prohibits direct aid to private schools, a lawyer for the state told the high court during argument in November.

The consolidated cases are Arizona Christian School Tuition Organization v. Winn, 09-987, and Garriott v. Winn, 09-991.