The U.S. Supreme Court ruled on Monday that dollar-for-dollar income tax credits for donations to private religious schools are constitutional.
In a 5-4 ruling, the Supreme Court threw out a lawsuit challenging Arizona's Private School Tax Credit Law, stating that state taxpayers are not forced to contribute to the state program which funds scholarships to private religious schools.
The majority opinion penned by Justice Anthony Kennedy rejected the lawsuit's claim that the money funds generated for private schools by the school tax credit belongs to the state.
The Alliance Defense Fund praised the judges' decision. "The court's reasoning is sound," said ADF Senior Counsel David Cortman. "The donations are private money, not government money."
The legal alliance of Christian attorneys defended the Arizona Christian School Tuition Organization, which was named in the lawsuit. It also issued one of the 18 amicus briefs asking the Supreme Court to reverse a U.S. Court of Appeals for the 9th Circuit decision that reinstated the case.
The dissenting opinion written by Justice Elena Kagan, President Barack Obama's judicial pick, said the ruling makes appropriations and tax subsidies interchangeable.
The Arizona Private School Tax Credit Law, established in 1997, allows state residents to receive dollar-for-dollar income tax breaks for donations ranging from $500 to $1,000 to non-profit school tuition organizations (STOs). Corporations can also receive a similar credit for donating to the fund. These STOs use the donations to give students scholarships to attend a private school.
While the bill does not stipulate the donations be made only to Christian STOs, Arizona State Legislative Research Analyst Stacey Morley acknowledged, "Its effect is that the donations go to a majority of religious schools."
This fact prompted the American Civil Liberties Union of Arizona to file suit against the law in 2005. It charged that the tax credit-funded school tuition program is not one of private taxpayer charity, but rather "a government spending program that supports religious discrimination."
Morley, who helped draft the legislation, denied that claim. She pointed out that the donations are made directly to the STOs. "We cannot accept [the donations]. Then that would pretty much make them [state funds]," she said.
The court dismissed this case in 2005. However, the ACLU challenged the credit in the U.S. Circuit Court of Appeals in April 2009. There, a three-judge panel ruled the credit was constitutional, but warned that a trial court might find the opposite true if scholarships were given for religious schools only. The case was later reinstated and appealed to the Supreme Court.
The Monday ruling now protects the Arizona Christian School Tuition Organization, one of more than 50 non-profit corporations organized to distribute private donations in the form of scholarships to more than 27,000 students attending hundreds of private schools throughout the state.