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The Supreme Court, in separate arguments on Wednesday, waded into two difficult parts of the Constitution that traditionally have divided the justices: religion and preemption. At the end of arguments in Arizona Christian School Tuition Organization v. Winn, the outcome of this potentially major establishment clause challenge may well depend on the justices’ understanding of the difference between a tax credit and a tax deduction. At the center of the case is an Arizona law that gives taxpayers a tax credit of up to $500 for contributions to private student tuition organizations. Those organizations make scholarships available to students to attend qualified schools. A group of parents challenged the tax credit program, arguing that it violated the establishment clause because the majority of student tuition organizations award scholarships on the basis of religion and require the students to attend religious schools. The U.S. Court of Appeals for the 9th Circuit agreed. Acting Solicitor General Neal Katyal, supporting the Arizona law, told the justices that the challengers had no standing to bring their lawsuit. Taxpayer standing to challenge government expenditures as violating the establishment clause, he said, is the “most narrow” of exceptions to the general rule that taxpayers cannot challenge government expenditures. The problem for these challengers, he argued, is that “not one cent of [their] money goes into any religious school coffers.” Under the Court’s precedents on taxpayer standing, he added, “It must be their money that is being extracted and spent.” They are complaining about the way in which other taxpayers’ funds are being extracted and spent. But Paul Bender of Arizona State University College of Law, representing the challengers, told the justices that the money raised for these tuition organizations is generated by the state income tax. “But this money has never been in government coffers,” insisted Justice Antonin Scalia. The justices then began a lengthy exchange with Bender over the difference between a tax credit and a tax deduction. Bender explained, “It turns on whether it’s your own money or what you owe the government.” When a taxpayer makes a charitable contribution, he said, it is the taxpayer’s own money at the time the contribution is made and a deduction is then given for that contribution, he explained, adding, “That’s not true of this [tax credit]. This is money owned the government.” Justice Anthony Kennedy told Bender, “I have some difficulty with the argument that any money the government doesn’t take from me is still the government’s money.” Turning to the constitutional question, Paula Bickett, Arizona’s chief counsel for civil appeals, the state law “is a neutral law that results in school programs of neutral choice.” Justice Elena Kagan, however, noted that this program is unlike school vouchers that the Court approved eight years ago. Vouchers, she said, go directly to parents on the basis of financial need and parents chose where to send their children. The government could not tell a qualified parent that he or she would not get a voucher if the parent, for example, was a Catholic, said Kagan. “What the state has done here is to use intermediaries to do what it can’t do directly. Why should these organizations be allowed to do what would clearly be impermissible for the state to do?” she asked. Bickett said parents get together with schools to form student tuition organizations to fund scholarships at both private and religious schools. In Wednesday’s preemption case, Williamson v. Mazda Motor of America, the justices examined a federal highway safety rule that gave auto manufacturers the option of installing lap belts or shoulder/lap restrains in the rear middle seat of their automobiles. At issue was whether the rule preempts a state design defect lawsuit by the family of a woman killed in a minivan that lacked the shoulder/lap combination. A court of appeal in Orange County, Calif. said their lawsuit was preempted. Martin Buchanan of San Diego’s Niddrie, Fish & Buchanan, counsel to the Williamson family, argued that the federal rule created a minimum standard with the objective of furthering the use of the shoulder-lap belt combination. The rule did not mandate the lap-shoulder restraint, he said, because, at the time, there were child safety, cost and other considerations that it wanted and encouraged auto manufacturers to resolve. In enacting auto safety legislation, he added, Congress explicitly said it was setting a minimum standard and a savings clause in the law preserved common law remedies. That argument appeared to be sufficient for Justice Ruth Bader Ginsburg who said, “The statute says minimum standard. The [federal] agency says there is no obstacle [to state tort suits]. That’s it.” But Mazda’s counsel, Gregory Garre, partner in Latham & Watkins, told the justices that federal highway safety agency in 1984 and 1989 specifically decided to give manufacturers flexibility in installing either the lap belt or the combination. “The agency recognized there were safety tradeoffs,” he said. Allowing state tort lawsuits, he added, would frustrate the agency’s objectives behind that option — child safety and flexibility. Chief Justice John Roberts asked Garre, “How do you tell if an agency is giving options or setting a minimum standard?” Garre said, “Look at the rule. It specifically rejected what the petitioner wants to impose by state tort law.” But Buchanan, in rebuttal, said, “State tort law provides incentives for manufacturers to exercise their options reasonably. Here it’s important to preserve state tort law because Congress said to preserve it. Here there is a clear expression of congressional intent.” Marcia Coyle can be contacted at [email protected].

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