April 4th, 2011
10:31 AM ET
By Bill Mears, CNN Supreme Court Producer
WASHINGTON (CNN) - The U.S. Supreme Court on Monday tossed out a lawsuit challenging Arizona's tax breaks for voluntary donations benefiting private school scholarships, many of them Christian-based.
The 13-year-old program provides dollar-for-dollar income tax credits for money given to "school tuition organizations," or STOs.
The 5-4 ruling split along conservative-liberal lines. Writing for the majority, Justice Anthony Kennedy said taxpayers challenging the program lacked "standing" to continue the suit.
"If an establishment of religion is alleged to cause real injury to particular individuals, the federal courts may adjudicate the matter," Kennedy wrote. "The fact that (those challenging the program) are state taxpayers does not give them standing to challenge the subsidies that (the program) provides to religious STOs."
The case involved a politically charged trifecta - taxes, religion and education.
Some Arizona taxpayers challenged the program as unconstitutional because, they say, not-for-profit religious organizations award most of the scholarships and require children to enroll in religious schools.
Those opponents said the state has effectively been funneling taxpayer money to religious schools through a third-party "front" group.
The justices were divided over whether that represented a de facto "endorsement" of religion by Arizona.
A key issue for the court was whether the tax credit meant the donated amount was the government's money or an individual's.
The growing popularity of school choice plans around the country has raised fresh legal questions about whether Arizona's plan is religion-neutral, and whether parents have true decision-making power, free from government intervention.
A federal appeals court ruled the decade-old lawsuit could proceed.
In 2002, the Supreme Court separately upheld school voucher programs.
Arizonans can receive a $500 credit ($1,000 for a couple filing jointly) off their state income taxes for contributions to school tuition organizations, which operate as charities. These organizations must spend at least 90 percent of money received on scholarships, and must offer them to students at more than one school. Parents would apply for the tax-credit funded scholarships at either a religious or secular school.
In this ruling, Kennedy said the tax credit did not amount to a "government expenditure."
"Awarding some citizens a tax credit allows other citizens to retain control over their own funds in accordance with their own consciences," he said. "Private citizens created private STOs; STOs choose beneficiary schools; and taxpayers then contribute to STOs."
He was supported by Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas, and Samuel Alito.
In dissent, Justice Elena Kagan said the majority "betrays" the vision of the nation's founders on the separation of church and state.
"Today's decisions devastates taxpayer standing in Establishment Clause cases," she wrote. "The court's opinion thus offers a roadmap - more truly, a one-step instruction - to any government that wishes to to insulate its financing of religious activity from legal challenges. ... However blatantly the government may violate the Establishment Clause, taxpayers cannot gain access to the federal courts."
Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor backed Kagan's views.
State figures show more than 50 school tuition organizations had received about $400 million in contributions through last year. In 2009, the program provided 27,000 scholarships to 373 schools, with most going to students who would not have been able to afford to attend.
An Arizona Republic newspaper investigation found that of the $54 million in scholarships awarded in 2008, 93 percent went to students attending religious schools.
Four Arizona taxpayers had sued the state and some of the largest school tuition organizations. The plaintiffs are represented by various outside groups, including the American Civil Liberties Union.
Taxpayers are generally limited in their ability to claim constitutional wrongdoing over government spending. A special class was carved by the high court 42 years ago - the so-called Flast exception– for some kinds of disputes related to the First Amendment's prohibition on government "establishment of religion."
The current cases are Arizona Christian School Tuition Org. v. Winn (09-987) and Garriott v. Winn (09-991).
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