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In a significant victory for “school choice” advocates, the U.S. Supreme Court on Monday denied standing to Arizonans who challenged a state tax credit program that indirectly benefits students in religious schools. The 5-4 ruling provoked a strong dissent from Justice Elena Kagan — her first written dissent as a justice. Kagan said the Court had ruled “against all precedent” in denying standing to those who claimed that the tuition tax credit violated the First Amendment’s establishment clause by subsidizing religious education. She said the Court had ruled five times before on tax subsidies like Arizona’s, “including in a prior incarnation of this very case!,” without doubting the standing of taxpayers to challenge the programs. The Court’s newest justice said the Court’s decision seriously weakens the establishment clause and provides a “one-step instruction” for governments seeking to circumvent the First Amendment to benefit religious programs. Her dissent was joined by justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor. The 5-4 ruling came in Arizona Christian School Tuition Organization v. Winn, and continues a general Court trend of restricting standing, or a plaintiff’s right to sue. The Court has long ruled that a person’s status as a taxpayer alone does not suffice for standing to challenge a government program, because the impact of taxes is diluted among millions of other taxpayers. But in 1968, the Court in Flast v. Cohen created a narrow exception for cases alleging unconstitutional establishment of religion because a dissenting taxpayer’s money, no matter how small an amount, could be said to have been transferred and spent on a religious entity. It was that exception that challengers to the Arizona law relied on. Under the program, taxpayers can receive a $500 tax credit — a dollar-for-dollar reduction in their taxes — if they contribute to nonprofit state tuition organizations that in turn provide scholarships to religious and other private schools. The program has cost the state $350 million in “diverted tax revenue,” as Kagan put it, since it began in 1997. The Supreme Court ruled in favor of the program on other grounds in 2004, but on remand it was struck down by the U.S. Court of Appeals for the 9th Circuit as an establishment clause violation. Justice Anthony Kennedy, writing for the majority on Monday, said the Flast exception did not apply because the Arizona program does not directly use a dissenter’s tax dollars to pay for a religious activity. “When Arizona taxpayers choose to contribute to STOs they spend their own money, not money the state has collected from respondents or other taxpayers,” Kennedy wrote. “Arizona taxpayers remain free to pay their own tax bills, without contributing to an STO.” Responding to Kagan’s point about precedent, Kennedy said prior rulings had not discussed standing one way or the other, so should not be read to support standing. He added that any benefit to religious schools “results from the decisions or private taxpayers regarding their own funds.” The U.S. solicitor general’s office, previously led by Kagan, supported the tax-credit program. Kennedy cast his opinion as a vindication of the Constitution’s Article III limitation of the Court’s jurisdiction to actual cases or controversies. That command would be violated, he wrote, if the Court had power “to invalidate laws at the behest of anyone who disagrees with them.” In an era of increased litigation, including class actions, Kennedy said, “courts must be more careful to insist on the formal rules of standing, not less so.” Justice Antonin Scalia, joined by Justice Clarence Thomas, wrote a separate concurrence stating that they would overrule the Flast exception altogether, calling it “an anomaly in our jurisprudence.” The Court heard oral argument in the case last November. Supporters of the Arizona program applauded the ruling as the latest sign that “school choice” programs, if properly crafted, can provide help to families choosing parochial schools. Tim Keller of the Arizona chapter of the Institute for Justice said, “It is now crystal clear that only those individuals who have a direct stake in the outcome of a case have standing to challenge a school-choice program in federal court.” But opponents said the decision will make it nearly impossible to mount establishment clause challenges against tuition or other programs that benefit religion. “This misguided ruling betrays the public school system by directing tax dollars to religious schools,” said Barry Lynn, executive director of Americans United for Separation of Church and State in a statement. “The court, with the full support of the Obama administration, has slammed the courthouse door in the face of Americans who don’t want their tax dollars to subsidize religion.” In her dissent, Kagan disputed the distinction Kennedy made between government appropriations and tax credits. She used a hypothetical analogy that sounded real: the federal program that rescued banks from financial disaster during the recent economic meltdown. “Imagine that the federal government decides it should pay hundreds of billions of dollars to insolvent banks in the midst of a financial crisis,” she wrote. She then posited that millions of taxpayers object to the plan and that, in response, the government decides to “allow banks to subtract the exact same amount from their tax bill they would otherwise have to pay to the U.S. treasury. Would this proposal calm the furor? Or would most taxpayers respond by saying that a subsidy is a subsidy (or a bailout is a bailout), whether accomplished by one means or the other? Surely the latter; indeed we would think the less of our countrymen if they failed to see through this cynical proposal.” She offered other provocative hypotheticals as well — government bonuses for Jews, or subsidies for the purchase of Christian crucifixes — and asked whether they would be any less objectionable if they were granted through tax credits or direct government payments. “Regardless of which mechanism the state uses, taxpayers have an identical stake in ensuring that the state’s exercise of its taxing and spending power complies with the Constitution,” she wrote. But her dissent, as upset as its tone was, ended with the phrase “I respectfully dissent,” which justices usually — but not always — use to show that collegiality can co-exist with disagreement. Tony Mauro can be contacted at [email protected].

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