Supreme Court Thwarts Challenge of Religious School Subsidies; Taxpayer Standing Demolished

April 4, 2011

This morning the Supreme Court issued a controversial 5-to-4 ruling that imperils the ability of taxpayers to challenge potential Establishment Clause violations involving government subsidies to religious institutions.

Justice Kennedy, joined by Justices Scalia, Thomas, Alito, and Chief Justice Roberts, dismissed a challenge to an Arizona tax aid scheme that directs tax dollars to religious schools. Under the Arizona scheme, state taxpayers may take a 100% credit for donations to "school tuition organizations" that fund religious and other private schools. Nearly 92% of all funds under the program have gone to religious school tuition.

The Court ruled that the plaintiffs in Arizona Christian School Tuition Organization v. Winn lacked standing as taxpayers to challenge the scheme in court, endorsing the Obama administration's argument that taxpayers have no right to bring law suits challenging the use of tax revenues to subsidize religion when the subsidy comes in the form of tax credits, as opposed to direct appropriations.

For nearly half a century, taxpayers have been able to seek judicial review of potential Establishment Clause violations under the rule announced in Flast v. Cohen, 392 U.S. 83 (1968), under which taxpayers may initiate law suits challenging the use of tax dollars to subsidize religion. The Court's ruling embraces a thin view of the Establishment Clause that will allow legislatures to perform an end-run around the Flast rule by employing tax credits instead of direct appropriations to subsidize religion.

The difference between government subsidies of religion through tax credits versus appropriations is purely formalistic. As Justice Elena Kagan noted in a dissenting opinion, joined by Justices Breyer, Ginsburg and Sotomayor:

A tax credit, the Court asserts, does not injure objecting taxpayers, because it "does not extract and spend [their] funds in service of an establishment." . . .

This novel distinction in standing law between appropriations and tax expenditures has as little basis in principle as it has in our precedent. Cash grants and targeted tax breaks are means of accomplishing the same government objective-to provide financial support to select individuals or organizations. Taxpayers who oppose state aid of religion have equal reason to protest whether that aid flows from the one form of subsidy or the other. Either way, the government has financed the religious activity. And so either way, taxpayers should be able to challenge the subsidy.

As a result of the Court majority's ruling, taxpayers' rights to challenge government subsidies of religion have all but evaporated. Because tax credits and direct appropriations may be used to achieve the same purpose, legislatures may subsidize religion by substituting a tax credit for a direct appropriation, secure in the knowledge that taxpayers may not challenge the subsidy in court. As Justice Kagan put it:

From now on, the government need follow just one simple rule-subsidize through the tax system-to preclude taxpayer challenges to state funding of religion.

And that result-the effective demise of taxpayer standing-will diminish the Establishment Clause's force and meaning. Sometimes, no one other than taxpayers has suffered the injury necessary to challenge government sponsorship of religion. Today's holding therefore will prevent federal courts from determining whether some subsidies to sectarian organizations comport with our Constitution's guarantee of religious neutrality.

Last year CFI and the Council for Secular Humanism submitted a joint friend-of-the-court brief with the American Humanist Association, the Freedom From Religion Foundation and others, urging the Supreme Court to maintain the long-held right of taxpayers to challenge religious subsidy schemes of the kind at issue in Winn.

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