U.S. Supreme Court rules taxpayers lack standing to bring suit challenging Arizona’s tuition tax credit program
Arizona Christian Sch. Tuition Org. v. Winn, No. 09-987 (U.S. Apr. 4, 2011)
Abstract: The U.S. Supreme Court, in a 5-4 vote, has ruled that Arizona taxpayers, who are the challenging the state’s tuition tax credit on Establishment Clause grounds, lack standing to bring the suit under Article III of the U.S. Constitution. Specifically, the Court’s majority concluded that the taxpayers had not satisfied the two ”conditions” laid out in Flast v. Cohen, 392 U. S. 83 (1968), in order to be excepted from the general rule that taxpayers lack standing to object to government expenditures alleged to be unconstitutional. Justice Kennedy, joined by Chief Justice Roberts, and Justices Scalia, Thomas and Alito, delivered the Court’s opinion. Justice Scalia, joined by Justice Thomas, filed a concurring opinion. Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayer, filed a dissenting opinion.
The decision also applied to the consolidated case of Garriott v. Winn, No. 09-981.
Facts/Issues: A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit (AK, AZ, CA, HI, ID, MT, NV, OR, WA, GU, MP) ruled that a group of taxpayers stated a valid legal claim that Arizona’s tuition tax credit law, providing private taxpayers with a tax credit for contributions made to a “school tuition organization” (STO), violates the U.S. Constitution’s Establishment Clause. The taxpayers filed suit in U.S. district court, claiming that the law is unconstitutional because it impermissibly subsidizes religious schools. Specifically, they argued that the statute allows money to be diverted from state coffers and given to STOs that in turn limit scholarships to students attending religious schools. Ninety-four percent of the funds donated the first year the law was in effect went to STOs that limit grants to students attending religious schools. The district court granted the defendants’ motion to dismiss the suit on the grounds that the plaintiffs failed to state a valid claim under the Establishment Clause.
The Ninth Circuit panel reversed the decision and remanded the case to the district court. After finding that the plaintiffs had legal standing to bring the suit, the Ninth Circuit began its analysis of the Establishment Clause claim by considering whether the statute had a valid secular purpose. While a legislature’s stated purpose generally receives judicial deference, “the secular purpose required has to be genuine, not a sham, and not merely secondary to a religious objective.” Acknowledging that the legislative history here revealed an apparent valid secular purpose, the court nonetheless concluded that the taxpayers’ allegations that the law’s design and scope “reveal this purpose to be a sham” stated a valid claim. The plaintiffs’ argument that in practice STOs are permitted to restrict the use of their scholarships to certain religious schools, if proved, “could belie defendants’ claim that [the law] was enacted primarily to provide Arizona students with equal access to a wide range of schooling options.” For purposes of this appeal of the dismissal of the case, the court had to assume the plaintiff’s factual allegations were true.
The full Ninth Circuit (all active participating) denied en banc rehearing. The defendants then petition ed the U.S. Supreme Court for certiorari, which was granted.
Ruling/Rationale: The Supreme Court examined whether the plaintiffs had standing despite “the general rule that taxpayers lack standing to object to expenditures alleged to be unconstitutional.” It pointed out that the plaintffs’ suit fell within the exception established in Flast, a narrow exception that requires the taxpayer to satisfy two conditions. First, there must be a “logical link” between the plaintiff’s taxpayer status and the type of legislative enactment attacked. Second, there must be “a nexus” between the plaintiff’s taxpayer status and “the precise nature of the constitutional infringement alleged.”
The majority rejected the taxpayers’ contention that for purposes of Flast the tax credit is ”best understood as a governmental expenditure.” It acknowledged “that tax credits and governmental expenditures can have similar economic consequences, at least for beneficiaries whose tax liability is sufficiently large to take full advantage of the credit.” The majority concluded, however, “tax credits and governmental expenditures do not both implicate individual taxpayers in sectarian activities.” It stressed that under this program Arizona taxpayers choose to contribute to STOs. They spend their own money, not money the state has collected from the plaintiffs or other taxpayers. “The STO tax credit is not tantamount to a religious tax or to a tithe and does not visit the injury identified in Flast [in which government funds were directly paid to religious schools],” and “[i]It follows that respondents have neither alleged an injury for standing purposes under general rules nor met the Flast exception.”
The majority also concluded that the taxpayers had failed to satisfy the requirements of causation and redressability. In regard to causation, it pointed out that contributions are made as result of decisions by private taxpayers concerning their own funds. The majority emphasized that “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.”
The majority acknowledged that its conclusion that the Flast exception is inapplicable may appear at odds with with several earlier cases, all addressing Establishment Clause issues and all decided after Flast. It disposed of the seeming contradiction, explaining that the standing issued could have been raised there, but “those cases do not mention standing and so are not contrary to the conclusion reached here.”
Justice Scaila’s concurrence took both the majority and the dissent to task for struggling to determine if the plaintiffs’ challenge to the Arizona tuition tax credit falls within Flast’s narrow exception. Instead, he would repudiate Flast, which he characterized as a “misguided decision,” and “enforce the Constitution.”
Justice Kagan’s dissent found the majority’s ”novel distinction in standing law between appropriations and tax expenditures” to have “as little basis in principle as it has in our precedent.” She warned that ”the Court’s arbitrary distinction threatens to eliminate all occasions for a taxpayer to contest the government’s monetary support of religion … because appropriations and tax breaks can achieve identical objectives, the government can easily substitute one for the other.” Kagan admonished, ”Today’s opinion thus enables the government to end-run Flast’s guarantee of access to the Judiciary.”
Kagan concluded that the ”very decisions the majority today so easily dismisses are featured in our prior cases as exemplars of jurisdiction.” Her dissent also explained, “Our taxpayer standing cases have declined to distinguish between appropriations and tax expenditures for a simple reason: Here, as in many contexts, the distinction is one in search of a difference.” She rejected the majority’s “extract and spend” requirement because “[i]t does not measure what matters under the Establishment Clause.” Specifically, in her view the Supreme Court ”has never indicated that States may insulate subsidies to religious organizations from legal challenge by eliciting the consent of some taxpayers.”
Arizona Christian Sch. Tuition Org. v. Winn, No. 09-987 (U.S. Apr. 4, 2011)
[Editor's Note: NSBA Executive Director Anne L. Bryant and General Counsel Francisco M. Negrón, Jr. expressed disappointment with the Court's decision. "The children of the state of Arizona deserve better than the diversion of nearly $350 million in tax revenue away from their public schools," said Bryant. "By ruling solely on the question of standing, the Supreme Court missed an opportunity to set aside a legislative scheme aimed at diverting public tax dollars into private, sectarian hands," said Negrón. "We hope today’s ruling does not embolden legislatures across the country to establish their own ill-conceived religious vouchers schemes using public money." Read NSBA's press release at the first link below.
NSBA filed an amicus brief in support of the taxpayers' challenge to the tax credit scheme. Background on the suit, including links to NSBA's brief, the Ninth Circuit's opinion and other related materials, is available at the second link below.]