The case, Arizona Christian School Tuition Organization v. Winn, is not very complex; at issue was whether the State of Arizona's practice of giving tax credits to individuals who gave money to so-called "school tuition organizations" that in turn funded scholarships to private and religious schools constituted a violation of the First Amendment's establishment clause. The Supreme Court's ruling did not touch on whether those tax deductions violated the establishment clause; rather, the conservative majority, in its usual 5-4 fashion, ruled that the litigants had no standing to contest the tax breaks. Writing for the majority was Justice Kennedy, who opined:
A dissenter whose tax dollars are "extracted and spent" knows that he has in some small measure been made to contribute to an establishment in violation of conscience. In that instance the taxpayer's direct and particular connection with the establishment does not depend oneconomic speculation or political conjecture. The connection would exist even if the conscientious dissenter's tax liability were unaffected or reduced. When the government declines to impose a tax, by contrast, there is no such connection between dissenting taxpayer and alleged establishment. Any financial injury remains speculative. And awarding some citizens a tax credit allows other citizens to retain control over their own funds in accordance with their own conscience.
This last part is crucial. In his opinion, Justice Kennedy has stated that tax deductions or credits, no matter the purpose, do not result in any connection between the "dissenting taxpayer and alleged establishment." In other words, tax breaks—no matter the incentive they are designed to produce—cannot be viewed as taxpayer funding per se on the grounds that the individual taxpayer is not directly funding the practice or establishment that the taxpayer may find objectionable.
This decision could potentially have far-reaching implications: not only did the conservative majority decide that tax deductions did not constitute establishment, they also opined that taxpayers did not have any legal right to sue over such decisions, thus outlining a clear path for states interested in getting the government to fund religious education: simply offer tax incentives, and according to ACSTO v. Winn, no taxpayer will meet the standing to challenge it in court.
Kagan strongly disagreed on both counts, Her sharp and biting dissent directly challenged the distinction between expenditures and deductions as it related to the establishment of religion:
Taxpayers who oppose state aid of religion have equal reason to protest whether that aid flows from the one form of subsidy or the other. Either way, the government has financed the religious activity. And so either way, taxpayers should be able to challenge the subsidy.
Still worse, the Court's arbitrary distinction threatens to eliminate all occasions for a taxpayer to contest the government's monetary support of religion. Precisely because appropriations and tax breaks can achieve identical objectives, the government can easily substitute one for the other. Today's opinion thus enables the government to end-run Flast's guarantee of access to the Judiciary. From now on, the government need follow just one simple rule--subsidize through the tax system--to preclude taxpayer challenges to state funding of religion.
The sense of Kagan's dissent matters little, however, as in our overtly politicized Supreme Court, there are only three other justices that agree with her on such things. The conservatives on the court all argued and voted for the contrary opinion: that there is a definite distinction as it relates to establishment of religion between direct taxpayer subsidies, and tax deductions. But one question remains: how far does this conservative philosophy regarding the principles of establishment and taxation extend?
The answer? Not far.
Ever since taking office, Congressional Republicans have been on an ideological culture crusade, apparently believing that the country's voters swept them back into office after two cycles of Democratic dominance to subjugate women rather than create employment. Threatening to shut down the entire federal government over Title X funding for Planned Parenthood, which does not even use any federal funding to provide abortions, is just the latest in a long line of misogynistic outrages perpetrated by tea-addled House Republicans. Of special note here was the odious H.R.3, the so-called End Taxpayer Funding of Abortion Act.
Of course, no taxpayer funding actually goes to fund abortions; the annually renewed Hyde amendment already ensures that, which is exactly why the portion of Planned Parenthood's services that are abortion-related (a total of three percent, rather than the over 90 percent claimed by Senator Kyl in a statement not intended to be factual) must be provided by non-government sources. So, taxpayer funding for abortion is already outlawed. So what would H.R.3 have done? First, it would have redefined rape. But it also would have significantly expanded the way that "taxpayer funding" is defined in relation to the question of abortion. To quote a previous piece on the subject:
The objective of H.R.3 is not to prevent taxpayer funding of abortion. As mentioned, the Hyde Amendment already does that. Rather, the objective is to influence private insurers to stop spending their private dollars paying for abortion services by preventing individuals and businesses who pay for those insurance plans from taking the tax credits that they would normally receive from doing so. (emphasis not original.)
Anyone smell the hypocrisy here? The basis for H.R.3, as well as other Republican initiatives such as anti-union arguments in Wisconsin as well as legislation aimed at families of striking workers, is one that DailyKos contributing editor David Waldman calls "fungibility":
H.R. 3 declares that because all money is "fungible," when you take a tax deduction that puts "federal dollars" in your pocket. And because those dollars are then available for you to use to pay for... anything... including your health care coverage, in order to prevent you from using them to pay for the kinds of coverage these Republicans don't like, the government will step in and take your deductions away.
So, the conservatives in Congress are pushing in several arenas for an end to tax deductions that cover activities they don't like using arguments based entirely on the fungibility of federal money. Meanwhile, a stone's throw away, the conservatives on the Supreme Court rule that tax deductions are not in fact fungible and that only direct appropriations of federal money would violate the establishment clause of the first amendment.
In conclusion: When are tax breaks like taxpayer subsidies? When saying so fits the social conservative agenda. And when are tax breaks NOT like taxpayer subsidies? When saying so fits the social conservative agenda.