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Supreme Court Allows Religious Separatists To Claim School Tax Credit

Of all the news stories I’ve read over the last few days, the Supreme Court’s recent decision in Arizona Christian School Tuition Organization v. Winn has stuck in my mind the most. All I could see in my mind’s eye were the numerous “segregation academies” that struggled financially in South Carolina during the 70’s and 80’s as court ordered desegregation slowly began to be accepted.

Many of the private schools across our state back then, especially the ones in the more rural areas of the state, were small affairs that had been hastily constructed and poorly maintained. With only the backing of the families of their students, most of them were doomed from the start to fail. The loss of their IRS exemptions due to their discriminatory practices sealed the fate of many of these schools.

The majority reaches a contrary decision by distinguishing between two methods of financing religion: A taxpayer has standing to challenge state subsidies to religion, the Court announces, when the mechanism used is an appropriation, but not when the mechanism is a targeted tax break, otherwise called a “tax expenditure.”1

Justice Elena Kagan, dissenting opinion  Arizona Christian School Tuition Organization v. Winn

Some enterprising soul in the Arizona legislature, no doubt helped along by an eager lobbyist, came up with the idea for these STO’s, an appellation that sounds suspiciously like the special purpose vehicles , better known as SPV’s, that allowed our major banks to operate certain portions of their business far from the eyes of federal regulators. Indeed, Justice Kagan’s mind must have followed the same path mine had upon seeing the phrase “STO” repeated over and over in case documents, as an example she proffers in her dissent shows:

 Imagine that the Federal Government decides it should pay hundreds of billions of dollars to insolvent banks in the midst of a financial crisis. Suppose, too, that many millions of taxpayers oppose this bailout on the ground (whether right or wrong is immaterial) that it uses their hard-earned money to reward irresponsible business behavior.

In the face of this hostility, some Members of Congress make the following proposal: Rather than give the money to banks via appropriations, the Government will allow banks to subtract the exact same amount from the tax bill they would otherwise have to pay to the U. S. Treasury. Would this proposal calm the furor? Or would most taxpayers respond by saying that a subsidy is a subsidy (or a bailout is a bailout), whether accomplished by the one means or by the other?

Justice Elena Kagan, dissenting opinion  Arizona Christian School Tuition Organization v. Winn

Now we have religious separatists in Arizona who have discovered the same thing that racial separatists did in the South in the 50’s and 60’s—voluntary segregation of any kind from the public school system is an expensive proposition.


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