Prediction: Arizona Tax Credit Program Will Stand

Published March 1, 2008

The plaintiffs in Winn v. Garriot argue that Arizona is unconstitutionally pressuring families to choose religious over secular schooling due to the state’s education tax credit program, because taxpayers are currently choosing to donate more money for scholarships to religious schools than to non-religious schools.

To accept that argument, it is necessary to believe that tax credits are government spending and that the tax credit program can be judged without considering the state’s far more extensive public school system. Neither belief holds legal water.

As the Arizona Supreme Court itself has already ruled, tax credits are not government funds. The money in question is never collected by the state treasury in the first place. Plaintiffs argue that, without the tax credit program, Arizona would collect more tax revenue, and, solely on the basis of that hypothetical observation, claim that the money private individuals donate under the program is therefore government money.

This is patently ridiculous, and the Arizona Supreme Court already dismissed that reasoning on the grounds that it would redefine essentially all money as government money, because the legislature always has the power to raise taxes above current levels–either by eliminating any of its existing tax credit or deduction programs, or by simply raising tax rates.

By the plaintiffs’ argument, any money that would enter the state’s coffers under these other hypothetical scenarios must also be state money, merely because the legislature has those tax-revenue-increasing options. But that would mean that essentially all the money earned by Arizona residents in fact belongs to the state, and it is only by the legislature’s largess that taxpayers are allowed to keep some portion of it.

If the Ninth Circuit rules in the plaintiffs’ favor on this point, it is highly likely to be overturned by the Supreme Court of the United States, as has so often happened in the past–the Ninth Circuit is by far the most reversed appellate court in the nation.

Furthermore, it is senseless to evaluate the tax credit program in a vacuum, as though the state were not actually involved in operating tuition-free secular schools that currently enroll well over 90 percent of the state’s schoolchildren. A chief reason that private schools in Arizona and the nation are predominantly religious institutions is that the government is giving away secular schooling for “free.” Free secular government provision crowds out fee-charging secular private provision.

Religious private schools, offering a service that the state cannot offer (devotional religious instruction), are protected to a certain degree from the free government system in a way that secular private schools are not. Thus, the Arizona legislature has been disproportionately favoring secular over religious education through the operation of free secular public schools for generations, and if the relatively tiny tax credit program leans somewhat in the other direction, the overall emphasis of the state’s educational services still leans very heavily toward pressuring families to accept the “free” secular schools that it offers, and heavily against families who would like to send their children to religious schools.

The U.S. Supreme Court has already stated, in Zelman v. Simmons-Harris, that to ascertain Establishment Clause acceptability, a state’s educational options must be viewed as a whole. So, here again, if the Ninth Circuit rules in favor of the plaintiffs, it is likely to be overturned.

Andrew Coulson is director of the Center for Educational Freedom at the Cato Institute in Washington, DC.