Court blesses Arizona school-choice program as Oklahoma considers similar measure

April 6, 2011

In a decision that has school choice advocates jumping for joy, the U.S. Supreme Court upheld Arizona’s tax credit scholarship program by a 5-4 vote on Monday, holding that the challengers did not have standing. Arizona’s tax credit program gives taxpayers a dollar-for-dollar reduction in state income tax payments to donors who give money for scholarships that allow Arizona students to attend a private school of their choice.

The main issue of the case was whether a tax credit that benefits religious schools should be treated like direct government spending benefiting religious schools for purposes of taxpayer standing. The majority opinion, written by Justice Kennedy, distinguished tax credits from direct government spending by pointing out that the money being used for scholarships is not state tax revenue, but rather the property of those who donate it. The dissenting justices, the liberal members of the court, do not recognize this distinction. This case highlights a fundamental divide between liberals and conservatives. Conservatives believe that the individual has a right to the fruits of his labor that is greater than the government’s right to those fruits. Liberals seem to believe that all income is property of the state and allowing individuals to keep their income is a government expenditure. Justice Kennedy got it right in this opinion, stating “private bank accounts cannot be equated with the Arizona State Treasury.”

In practical terms, this decision opens the door for similar tax-credit programs in states that are serious about school choice. In Oklahoma, Senate Bill 969, which recently cleared the state Senate, would give individuals and corporations a tax credit for contributions to scholarship-granting organizations or educational improvement grant organizations. Individuals would receive a 50 percent tax credit annually for contributions up to $1,000 (or up to $2,000 for married couples filing jointly). Corporations would receive a 50 percent tax credit annually for contributions up to $100,000. These scholarships would go to students who need educational choice the most: students with special needs, students from homes below a certain income level, or those living in a school district that needs improvement. Grants would also go to public schools who are seeking to implement innovative educational programs that would enhance the quality of education at that school.

One need only look at the success of Arizona’s law to see the merits of tax-credit scholarship programs. In Arizona, parents are getting to choose the education they prefer for their children and the state is saving a significant amount of money. This kind of sound fiscal and educational policy should be imitated in all states.