Arizona Taxpayers Barred from Challenging Tuition Tax Credit Program

Last Updated: April 27, 2011

This article appeared in the April 2011 Rural Policy Matters.

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A tuition tax credit program in Arizona has survived a challenge that progressed to the U.S. Supreme Court. In a closely watched case, Arizona Christian School Tuition Organization v. Winn, taxpayers challenged the ability for Arizonans to receive a dollar-for-dollar tax credit for contributions to a school tuition organization. Last tax year, Arizonans diverted more than $43.2 million to the scholarship organizations. In a 5–4 decision, the justices held that the taxpayers did not have standing to challenge the law because they had suffered no injury. Generally taxpayers cannot challenge government spending decision except for those that may violate the Establishment Clause. In their ruling, the Justices narrowed that route to the courthouse further by holding that the credited tax funds were not governmental funds but belonged instead to the individual who is therefore free to spend them as they prefer. There was no ruling on the constitutionality of the program, which many people think will now be replicated in other states. The tuition organizations in Arizona place limits on who can receive the scholarships, in many cases stipulating that the student attend a religious school.

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Other states considering tuition tax credit-type legislation, including Indiana, have been following the Arizona case very closely:

Read more from the April 2011 Rural Policy Matters.