Arizona School Choice Upheld

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Arizona School Choice Upheld

Special Report - April 5, 2011
In a precedent-setting ruling yesterday that will positively impact parental choice in education nationwide, the United States Supreme Court dismissed a lawsuit against Arizona’s 13 year-old education tax credit program. The high court ruled 5 to 4 on April 4 that the plaintiffs in the lawsuit, a group of Arizona taxpayers represented by the American Civil Liberties Union (ACLU), had no legal standing to sue “because respondents challenge a tax credit as opposed to a government expenditure.”

Arizona’s Individual School Tuition Organization Tax Credit Program provides a dollar-for-dollar tax credit on state income taxes for taxpayers who make a voluntary donation to any of more than 50 private nonprofit School Tuition Organizations in the state. The credit is capped at $500 for an individual and $1,000 for a married couple. Qualifying organizations must distribute at least 90 percent of donated funds as scholarships for students to attend private schools—religious or secular—that do not discriminate on the basis of race, color, handicap, familial status, or national origin. In the lawsuit, Arizona Christian School Tuition Organization v. Winn, the ACLU argued on behalf of the plaintiffs that because the majority of parents who receive the tax credit choose to enroll their children in religious schools, the program violated the Establishment Clause of the First Amendment. In 2005, a federal court dismissed the lawsuit. But in 2009, the 9^th Circuit Court of Appeals reinstated the lawsuit, agreeing with the plaintiffs that, “Arizona’s tax-credit funded scholarship program lacks religious neutrality and true private choice in making scholarships available to parents.” That decision was appealed to the U.S. Supreme Court, which agreed in June 2010 to consider the case.

“When Arizona taxpayers choose to contribute to STOs, they spend their own money, not money the State has collected from respondents or from other taxpayers,” Justice Anthony Kennedy explained in the majority decision issued April 4. “Objecting taxpayers know that their fellow citizens, not the State, decide to contribute and in fact make the contribution. These considerations prevent any injury the objectors may suffer from being fairly traceable to the government. Like contributions that lead to charitable tax deductions, contributions yielding STO tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations. Respondents’ contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence. Private bank accounts cannot be equated with the Arizona State Treasury.”

The Alliance Defense Fund (ADF), which represented the Arizona Christian School Tuition Organization in the lawsuit, said in a statement that the 5 to 4 decision “creates a national precedent that will prevent similar legal attacks in the future.”

“Parents should decide what schools their children attend and where their money goes,” said David Cortman, senior counsel for ADF. “The ACLU failed in its attempt to eliminate school choice for hundreds of thousands of students nationwide and also failed to demonstrate that it had any constitutional basis for its clients to file suit in the first place.”

Related Resources:
Nonpublic Student Tax Credit - February 8, 2011
U.S. Supreme Court Begins New Term - October 7, 2010
Court To Hear School Choice Case - June 10, 2010
Georgia Offers Education Tax Incentives - May 21, 2008
Tax Credits Would Benefit Students and State - April 10, 2008