Plaintiffs asserted an Establishment Clause challenge to an Arizona tax-credit statute that effectively allows residents to direct part of their tax payments to organizations that provide scholarships to students. An overwhelming majority of these payments are directed toward religious organizations that support students who attend religious schools. Upon the defendants’ motions, the federal district court dismissed the case, based in part on its determination that the plaintiffs lacked standing to raise the Establishment Clause claim (meaning that they were not the right people to bring the case). Plaintiffs appealed to the U.S. Court of Appeals for the Ninth Circuit, which reversed the dismissal and remanded the case to the district court. The defendants, in February 2010, filed a petition for a writ of certiorari with the U.S. Supreme Court, which the Court granted.
Americans United, together with various other organizations, filed an amicus brief in support of the plaintiffs in September 2010. The brief argued that, for purposes of standing, there is no functional difference between tax expenditures—including tax credits—and cash grants (for which taxpayers would normally have standing to bring an Establishment Clause claim). The two have virtually identical economic effects. Distinguishing between tax and cash expenditures would call into question numerous cases in which the Court addressed the merits of Establishment Clause challenges to tax credits and tax deductions without raising any questions about the taxpayers’ standing. The brief also stressed that the limits that apply to federal-taxpayer standing should not apply to state-taxpayer standing because of the vast differences between the taxing-and-spending regimes of the federal and state constitutions.
In a 5–4 decision issued on April 4, 2011, the Court held that the plaintiffs lacked taxpayer standing to assert their Establishment Clause claim. According to the Court, because the Arizona program was funded through tax credits, which were deducted from the tax bills of taxpayers who chose to claim them, the statute did not result in coercion of any taxpayers to support religion against their will. This ruling required the dismissal of the case.
