Supreme Court approves money-laundering for religious schools

Arizona’s state constitution makes it illegal for the state to support religious schools. The legislature did an end-run around the constitution, allowing programs to fund religious schools using tax credits – for every dollar a taxpayer contributes to a “school tuition organization,” or STO, the state takes a dollar off that person’s tax liability. Most STO’s support religious schools. Therefore, state tax dollars are being laundered through STOs to fund religious schools. If not for this program, the money would end up in state coffers. When a group of taxpayers who didn’t take advantage of the credit sued the state, the case ended up in the U.S. Supreme Court. Writing for the majority, Justice Anthony Scalia performs acrobatic maneuvers to avoid the basic truth that state money was being used, unconstitutionally, to support religious education.

“Arizona’s [tax credit law] does not extract and spend a conscientious dissenter’s funds in service of an establishment [of religion],” Justice Kennedy wrote. “On the contrary,”respondents and other Arizona taxpayers remain free to pay their own tax bills, without contributing to an STO . . .” He went on:

Respondents’ contrary position—that Arizonans benefiting from the tax credit in effect are paying their state income tax to STOs— assumes that all income is government property, even if it has not come into the tax collector’s hands.

Never mind, of course, that “respondents and other Arizona taxpayers” will either pay more in taxes because of state money being laundered into private schools or put up with diminished services because tax money is being diverted to unconstitutional ends. The assumption isn’t that “all income is government property” – that’s tea party nonsense, and it demonstrates a diminution of the U.S. Supreme Court that such nonsense ended up in a majority decision. The assumption is that a tax credit designed to completely compensate a taxpayer for a donation made to an outside organization is, in essence, a state contribution to that organization. And if the state would not be allowed to make that contribution directly, it should not be allowed to do so with a pass-through from a taxpayer.

Technically, the court didn’t rule on the merits of the taxpayers’ case – though Kennedy made it clear he thought they had none. The issue was standing. If the case had involved a direct government expenditure, the taxpayers would have had standing. Since it involved a tax credit, though, they did not. As Justice Elena Kagan made clear in her dissent, that is a distinction without difference: “Appropriations and tax subsidies are readily interchangeable. What is a cash grant today can be a tax break tomorrow.”


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