Supreme Court Upholds Tax Credits for Donations to Religious Non-Profits

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A sharply divided Supreme Court today found that Arizona taxpayers do not have the legal right to challenge a state law that allows residents to receive tax credits for contributions to non-profit organizations . The law allows those non-profit organizations to use the funds to give scholarships to children who want to attend private schools.

The taxpayers had challenged the law arguing that in practice the non profit groups only provided aid to students attending religious schools in violation of the Constitution. The Establishment Clause of the Constitution prohibits government actions from favoring one religion over another.

Justice Anthony Kennedy, joined by the four conservative justices, said that taxpayers only have the so-called "legal standing" to bring such a suit if it involves a government expenditure, not a tax credit.

"When Arizona taxpayers choose to contribute " Kennedy wrote, "they spend their own money, not money the state has collected from respondents or from other taxpayers. "

The Arizona legislature passed the law in 1997 to encourage greater educational choice for disadvantaged elementary school children. Any taxpayer can participate, but parents are fobidden from earmarking a donation for their child.

Because the court found that the taxpayers could not bring the suit, it did not reach a decision on whether the law itself is constitutional.

Justice Elena Kagan, joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor, wrote a strongly worded dissent disagreeing with the majority's reasoning that the taxpayers' right to bring suit is only triggered by a government expenditure.

"Today's decision devastates taxpayer standing in Estab- lishment Clause cases." she wrote.

"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."

Today's decision will narrow the ability for taxpayers in general to challenge alleged Establishment Clause violations. A number of other states have programs like Arizona. "This is a big deal because it permits the government to aid religious causes through the tax credit device without fear of any litigation that might disturb the government policy," says Ira. C. Lupu, an expert on church and state issues at George Washington Law School.