Last year, the U.S. Supreme Court issued the infamous Citizens United decision which overturned century-old precedent and now allows corporations to spend unlimited sums in their support for, or opposition of, candidates for public office. To the corporate elite for whom a million dollars here or there represent mere rounding errors, Congressional seats come cheap. My hundred dollars -- or OUR few thousand dollars, collected over a period of time -- cannot compete with a single transfer of ten or twenty millions of dollars into a single race.
But the ruling issued by the Roberts Court today is just as deadly to state treasuries and to public education as we know it. I'm confident that the far right's instruments in Columbia have spent today as spiders weaving, getting at their knitting with furious abandon, and tonight are toasting behind the oak doors. They know what the rest of us don't understand yet: A massive piece of change is about to come to South Carolina.
Here's NPR's Nina Totenberg's summary:
A deeply divided U.S. Supreme Court ruled Monday that taxpayers have no legal right to challenge a tax break worth millions to donors supporting private religious schools. The 5-4 decision left intact an Arizona tax subsidy that was enacted because the state constitution forbids direct aid to religious schools.
Arizona is one of many states that has a state constitution barring direct aid to religious schools, including vouchers. These provisions date back more than a century.
South Carolina's Constitution includes the same prohibition in Article XI:
SECTION 4. Direct aid to religious or other private educational institutions prohibited.
No money shall be paid from public funds nor shall the credit of the State or any of its political subdivisions be used for the direct benefit of any religious or other private educational institution. (1972 (57) 3193; 1973 (58) 44.)
This simple statement has been a staple of the opposition to voucher and tuition-tax-credit proposals from former Governor Mark Sanford and his successor. But while South Carolina has not adopted any law in open defiance of this principle, Arizona did, and taxpayers in that state sued. Their case is the case on which the Court ruled today.
To get around the ban on vouchers, Arizona enacted a law that allows residents to take a tax credit for money given to a private school scholarship funds known as a "school tuition organizations."
A tax credit is different from a tax deduction. The credit comes directly off the tax bill on a dollar-for-dollar basis, so a $500 donation to a school tuition organization allows the donor to take $500 off his owed taxes. In contrast, a charitable donation of $500 to a private school would be worth no more than one-third of that amount in tax deductions.
This means every $500 that is given to a "tuition organization" is $500 directly diverted from the state's treasury, dollar for dollar. How great an impact could this become?
Consider that any corporate interest can open a nonprofit "tuition organization" -- Sanford named them "scholarship granting organizations," or SGOs -- and that corporate interest might (if it pays corporate income taxes to South Carolina at all) owe the state $10 million in corporate taxes this year. If it chooses to do so, it can contribute $10 million to its own "tuition organization" and parcel those funds out as vouchers to private or religious schools instead, and take the entire amount off their tax bill as a "credit."
The loss of that $10 million to the state treasury means either that our wise lawmakers will cut $10 million from public services -- including, surprise! public schools -- or you and I will have to make up the $10 million through additional taxes or fees. The winners in this formula are, as usual, the ideological corporate elite, and their pet private or religious schools.
Do you imagine that it won't happen in South Carolina? It already did in Arizona.
Under the Arizona law, more than $50 million was donated annually to student tuition organizations, which, in turn, directed the money to private schools, at least two-third of them religious schools.
A group of taxpayers challenged the tax credit in court, contending that it amounted to an unconstitutional state subsidy for religious schools.
But on Monday, the Supreme Court ruled that the taxpayers have no legal right to bring such a challenge.
Justice Anthony Kennedy, writing for the five-justice majority, said that taxpayers may challenge a direct legislative appropriation for religious schools, but not a tax credit. He conceded that a tax credit and a direct government expenditure "may have similar economic consequences," but he said a tax credit is different because any injury to the disagreeing taxpayer is "speculative," and the money is directed by private individuals, not the state.
Not one but two new principles have come from this ruling: (1) that a state like South Carolina is now free to allow corporations and wealthy individuals to divert funds before those funds arrive in the treasury to private schools through vouchers, and (2) ordinary taxpayers have no legal standing to challenge such legislation in court. We're barred from the discussion, you and I, and no key will let us back in the door.
Civil libertarians reacted to the decision with dismay. Arizona State University law professor Paul Bender, who represented the Arizona taxpayers, says the court's opinion defies reality.
"The state has a budget deficit of a billion dollars, so when $100 million doesn't come into the Treasury, the rest of the state's taxpayers have to make up for that," he says. "The idea that [the tax credit] doesn't affect the rest of the state's taxpayers is just fantasy."
Justice Elena Kagan, in a blistering dissent — her first dissent since joining the court — said Monday's decision "devastates" the ability of taxpayers to challenge government actions that favor religion.
In reality, she said, there is no difference between a tax credit and a direct appropriation. "What is a cash grant today can be a tax break tomorrow," and the court's decision, she charged, "offers a road map — more truly, just a one-step instruction — to any government that wishes to insulate its financing of religious activity from legal challenge."
The Court's ruling, NPR reports, "follows a 2007 decision that barred challenges to President George W. Bush's faith-based initiative because it used discretionary funds in the executive branch." Again, taxpayers are barred by the court from challenging the decisions of its elected government in court.
Civil libertarians suggested on Monday that the ruling in that case, combined with the Arizona ruling, has the effect of eroding the constitutional separation of church and state.
But Stanford University law professor Michael McConnell says these decisions "probably [do] not change the ultimate outcome of any cases," given the current Supreme Court's more accommodating view of church and state.
Dismissing the challenges on the basis of legal standing, rather than on the merits, he says, "just means [the cases] are going to be resolved at a slightly earlier stage in the litigation."
University of Michigan law professor Douglas Laycock isn't so sure. He argues that the ruling opens another — and more politically appealing — avenue for legislators to support religious schools.
Although the Supreme Court upheld school voucher programs nearly a decade ago, he notes most states have not adopted voucher programs because they cost the state money.
"It is mostly Republicans who support these aid-to-religion programs, and Republicans don't want to raise taxes to pay for vouchers," Laycock says. "But if they can do it through a tax credit, they can support religious schools and claim it's a tax cut all at the same time."
The New York Times added a bit more detail, but not much.
“Awarding some citizens a tax credit allows other citizens to retain control over their own funds in accordance with their own consciences,” Justice Kennedy wrote for himself, Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr.
That may be well for the Court, but the ruling also -- wittingly or otherwise -- establishes in law that we now have, dare I say it, two Americas: one for the wealthy corporate elite whose ideology leads them to promote the dismantling of public services and public schools, and one for the rest of us whose combined wealth cannot buy equal justice, and who rely upon public services and public schools to give a foundation to our democracy.
The plaintiffs’ position, Justice Kennedy wrote, “assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands.”
I've heard it said often that to avoid paying taxes is no crime, but to evade paying taxes is. What the Court has declared today is that for those wealthy enough, tax evasion is legal, too.
Don't believe that elections have consequences? Read more of Kagan's dissent and imagine what might have happened it she'd been elevated to chief Justice rather than Roberts.
In her dissent in the case, Arizona Christian School Tuition Organization v. Winn, No. 09-987, Justice Kagan said the majority’s position was an elevation of form over substance. “Taxpayers experience the same injury for standing purposes,” she wrote, “whether government subsidization of religion takes the form of a cash grant or a tax measure.”
She offered examples. “Suppose a state desires to reward Jews — by, say, $500 per year — for their religious devotion,” she wrote. Would it matter to taxpayers offended by the practice whether the reward came in the form of a government stipend or a tax credit?
“Or assume,” she wrote, “a state wishes to subsidize the ownership of crucifixes” in one of three ways. It could purchase them in bulk and distribute them; it could reimburse buyers with a check; or it could pay with a tax credit.
“Now, really — do taxpayers have less reason to complain if the state selects the last of these three options?” Justice Kagan asked.
Justice Kagan said the majority’s opinion was particularly surprising because the court had never thought the point even worth arguing over. “To the contrary: We have faced the identical situation five times — including in a prior incarnation of this very case! — and we have five times resolved the suit without questioning the plaintiffs’ standing,” she wrote.
Justice Kagan acknowledged that people would sometimes continue to have standing of the more traditional sort to challenge government spending on religion. In other cases, though, she wrote, Monday’s decision “will prevent federal courts from determining whether some subsidies to sectarian organizations comport with our Constitution’s guarantee of religious neutrality.”
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