High court recognizes the distinction between credits and subsidies


In Arizona, a 14-year-old program gives tax credits to those who donate to organizations that provide private-school scholarships. After Arizona taxpayers have computed how much they owe in state income taxes for the previous year, individuals are allowed to send as much as $500 to so-called school tuition organizations, reducing their tax liability by the same amount.

The scholarships thus funded help worthy young scholars from poor families escape dysfunctional public schools.

Opponents challenged the Arizona program, holding the tax credits have the same effect as a state subsidy to a religious school, even though no government agent had any say over where those funds flowed.

On Monday, the U.S. Supreme Court ruled 5-4 that opponents lacked standing to challenge the 14-year-old program.

The case split the court along familiar lines, with the court's five Republican appointees -- Chief Justice John Roberts, and Justices Anthony Kennedy, Antonin Scalia, Clarence Thomas and Samuel Alito -- in the majority.

Generally, Americans aren't allowed to go to court to contest how their tax dollars are spent. A 1968 decision, Flast v. Cohen, did grant an exception to that rule, holding individuals can challenge statutes that direct government money to be spent for religious purposes.

But Monday's majority said Flast doesn't apply, because the Arizona case involved a tax credit, rather than an appropriation of government dollars. "Contributions result from the decisions of private taxpayers regarding their own funds," Justice Kennedy wrote. "Objecting taxpayers know that their fellow citizens, not the state, decide to contribute and in fact make the contribution."

Justice Elena Kagan wrote the dissent, accusing the majority of creating a "novel distinction" between a tax credit and a government appropriation. "Either way, the government has financed the religious activity," she wrote. "And so either way, taxpayers should be able to challenge the subsidy."

But it's Justice Kagan and the statist minority who offer the novel -- and dangerous -- approach.

Tax write-offs are very different than subsidies. If a tax deduction were a "subsidy," then virtually every government entity in America already stands in violation of any ban on "subsidizing" churches and other charities by the simple fact that most such enterprises are in many ways "tax free."

Many Americans write off their home mortgage interest. Is this a "direct subsidy" to those homeowners, meaning the government has a financial interest in their house and therefore has a right to inspect the premises without a warrant?

Those who fund tuition for able young scholars at private schools are reducing the financial burden on the public schools -- as well as promoting competition and diversity in education and thought. That this hands-off approach amounts to the government "establishing" any one religion, because some of the schools issuing these scholarships may be run by any number of churches, temples or religious societies, is absurd.

The court got this one right.

 

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