WASHINGTON — A sharply divided Supreme Court upheld Arizona’s tax-credit program, which offers dollar-for-dollar reduction in state income tax for donations to tuition organizations that support religious schools.
The court’s 5-4 decision April 4 sets a precedent that could benefit religious schools throughout the country, including Catholic schools.
Justice Anthony Kennedy wrote in the majority opinion that such laws do not violate the Establishment Clause. “When the government declines to impose a tax, there is no such connection between dissenting taxpayer and alleged establishment.”
The U.S. Conference of Catholic Bishops joined the Union of Orthodox Jewish Congregations of America, the Christian Legal Society, the Council for Christian Colleges & Universities, the Center for Arizona Policy and the Association for Biblical Higher Education in filing an amicus brief supporting the Arizona law. The brief argued: “The complaint that too many contributions under the program have been directed to religious schools is a complaint that voluntary religion is vigorous among Arizona taxpayers.”
Marie Powell, executive director of the USCCB Secretariat for Catholic Education, was pleased with the decision. “This at least gives some support for lower-income and middle-income families to have the benefit of scholarships that organizations can set up, and individuals can make donations to these scholarship organizations — and take it as a tax credit off their own individual taxes.”
Arizona is not the first state to offer this kind of program, but the high court’s decision affirms the validity of such laws. Powell says that similar programs have proven successful in other states, and the tax credits are not as exclusive as its opponents allege. “Any private school can set up a tuition organization so that it doesn’t just benefit religious schools. Other states have laws that allow corporations or individuals to get a tax credit for donating to a scholarship organization. Pennsylvania has one for corporations that has been highly successful and has had bipartisan support. Iowa has an individual tax-credit program similar to Arizona’s and so does Rhode Island.”
Arizona’s credits are capped at $500 for individuals and $1,000 for couples filing jointly. It also stipulates that the Arizona School Tuition Organization Association (ASTOA), whose members benefit from these programs must spend at least 90% of their contributions on tuition grants.
Opponents argue that these credits mean a loss of funding for public schools. The website for the Arizona Education Association teachers’ union says that in 2007 ASTOA received $54,304,202, while Arizona’s public schools rank 50th among all states in per-pupil public expenditures.
Ron Johnson, executive director of the Arizona Catholic Conference, dismisses such arguments as hollow: “Private schools across the country are closing at a rapid rate. We’ve largely been able to stave that off in Arizona, and there’s no doubt that one of the reasons is because we have some tools that most states don’t — these tax credits. The court has determined that these tax-credit moneys are not public money. It comes from you and me and other private donors. The ACLU (representing the plaintiffs) was trying to argue that this was government money. Fortunately, the court said it was not. Otherwise, it’s not that much different than the tax deductions we take for donations to churches or other organizations — if they want to consider that government money.”
Johnson also scoffs at the plaintiffs’ argument that the law unfairly favors religion. “It does not,” he said. “It certainly helps us. However, they’re complaining that the Catholic Tuition Organizations [established by the Diocese of Phoenix in 1998] only helps Catholic schools. Well, they do, but they also give to non-Catholic kids who are going to Catholic schools as well. There are over 50 school-tuition organizations in Arizona that give to Jewish, Lutheran and secular schools. If someone doesn’t want to go to a Catholic school, they can just apply to any one of the other 50 organizations.
“The marketplace works,” he continued. “Most private schools have some sort of religious affiliation, and a large number of those are Catholic, so it shouldn’t be surprising that a large amount of the money going to the tuition organizations goes to our schools.”
Paul Mulligan, executive director of Arizona’s Catholic Tuition Organization, believes the high court clarified the issue. “The court did a nice job of separating the fact that this is just a series of independent choices that are being made,” he said. “The government is not supporting religious schools — independent taxpayers are, and parents are choosing to send their kids there.”
While Arizona’s tax-credit system might make it a model for other states, not everyone in the state is as enthusiastic as Johnson and Mulligan. On April 12, Gov. Jan Brewer vetoed a bill that would have increased tax-credit limits by 50%, citing deficit reduction as the reason: “Aggregate caps on tax credits are critical to the state’s ability to budget.”
Brewer did, however, sign a bill into law establishing educational savings accounts.
Mulligan was disappointed by the veto. “Obviously, we wanted to see the other bill pass, because we’ve been able to demonstrate that — at least speaking of Catholic schools — they offer an extremely competitive product where the kids graduate 99%, and 97% go on to post-secondary education, and we’re doing it at a drastically lower cost of education. So when the state gives up a couple thousand dollars of a tax-credit scholarship that they don’t collect in the general fund, they save $9,400 in public-school costs, which is not something that you can easily ignore when you are trying to balance the state budget.”
Robert Kumpel writes from Valdosta, Georgia.