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Supreme Court Bars Taxpayers from Challenging Tax Credits Given for Contributions to Religious Schools

K-12 Education Publications

The United States Supreme Court recently held in Arizona Christian School Tuition Organization v. Winn that taxpayers lacked standing to challenge an Arizona law that gives tax credits for financial contributions to school tuition organizations providing scholarships to students attending private schools, including religious schools.  In particular, the Court held that because the taxpayers challenged a tax credit, as opposed to a government expenditure, they lacked standing to assert that the law violated Establishment Clause principles of the First and Fourteenth Amendments to the U.S. Constitution.

In Arizona Christian School Tuition Organization, the Court held that taxpayers must assert more than just a “generalized interest of all citizens in constitutional governance.”  Instead, the taxpayers must assert a causal connection between their alleged injury and the conduct being challenged.  Taxpayers must also demonstrate that their injury will be remedied by a favorable decision.  The Court distinguished this case from its 1968 decision, Flast v. Cohenin which the taxpayers challenged a federal statute providing government funds to support textbook purchases for religious schools.  In Flast, the injury to the taxpayers had a direct causal connection to the government action—their tax money was being spent to support religious schools in violation of the Establishment Clause.  In Arizona Christian School Tuition Organization, however, the tax credit does not force a taxpayer to contribute to a religious organization.  Rather, the Court found that individuals are free to pay their own tax bills without being required to contribute to a religious organization.  Unlike the Flast case where government contributions went to religious organizations, here contributions result from private taxpayer decisions regarding their own money.  The Court further held that the injunction the taxpayers sought would likely only reduce the contributions to the school tuition organizations, but would not affect non-contributing taxpayers or their tax payments.  Thus, the taxpayers could not demonstrate, beyond speculation, that their injury would be remedied by a favorable decision from the Court.

The Court did not address whether Arizona’s tax credit program is constitutional; rather it only held that the taxpayers who filed the lawsuit did not have standing to challenge the law.  Although the ruling itself is narrow, the Court’s decision could further insulate other education tax credit programs from constitutional challenges by individual taxpayers.  For example, Illinois provides a tax credit for qualified educational expenses, including expenses paid toward tuition for private religious schools.  While an Illinois Appellate Court has already found Illinois’ tax credit program constitutional on its face, the Supreme Court’s ruling in Arizona Christian School Tuition Organization could make it difficult for individual taxpayers to further challenge the program.  Notably, however, the Court did not close the door to challenges by individuals who are more directly affected by a government’s program than a general taxpayer.  Indeed, the Court references a previous decision where it found that individuals did have standing to challenge a state law requiring prayer in schools because the individuals’ children were enrolled in the schools and were thus “directly affected” by the challenged laws.  Thus, the Court’s ruling does not prohibit constitutional challenges by individuals who can demonstrate they are directly affected by a government action, including school-related challenges by parents.