June 19 2013
Vicki E. Alger
On Monday a New Hampshire judge deemed the state’s new tax-credit scholarship program unconstitutional. The (faulty) reasoning behind the decision is compounded by his clear confusion about tax-credit scholarship programs.
Under the state’s program businesses are allowed to make tax-deductible donations to non-profit scholarship-granting organizations that award scholarships worth up to $2,500 (more for special needs students) to low and moderate income public school students to attend another public school or private school. Total donations are capped this school year at $3.4 million, and businesses may claim up to 85 percent of their scholarship donation on their state taxes.
Strafford County Superior Court Judge John Lewis claims the program violates the state’s constitutional ban against public money supporting private schools, according to the Concord Monitor:
Lewis yesterday ruled the law violates Article 83 of the New Hampshire Constitution, which states that ‘no money raised by taxation shall ever be granted or applied for the use of the schools of institutions of any religious sect or denomination.’ Lewis found the program uses public funds, even if funding doesn’t come directly from the government. Money that would have flowed to the government, he said, is instead diverted for a specific purpose. ‘A taxpayer’s interest is . . . not dependent on the number of hands the money passes through. A taxpayer’s concern arises when a large portion of the donated funds are, as here, realized very much through a tax credit,’ Lewis wrote.
Judge Lewis’ decision will almost certainly be overturned by the state supreme court with good reason. In 2011 the U.S. Supreme Court decisively rejected the notion that the money we earn automatically belongs to the government when it ruled on a similar argument against Arizona’s—and the country’s—first tax-credit scholarship program. Writing for the majority, Justice Anthony M. Kennedy stated:
Like contributions that lead to charitable tax deductions, contributions yielding [School Tuition Organization] tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations. Respondents’ [the ACLU of Arizona] contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence.
Or common sense, for that matter.