On April 4, 2011, the United States Supreme Court held in Arizona Christian School Tuition Organization v. Winn, by a narrow five-to-four majority, that Arizona taxpayers did not have "standing" to challenge a state law that gives tax credits for contributions made to School Tuition Organizations (STOs). These STO’s give scholarship money to students attending private schools—which include but are not limited to religious schools. The Arizona program stipulated that a "qualified school" could not "discriminate on the basis of race, color, handicap, familial status, or national origin." Noticeably absent from this statutory list was discrimination on grounds of religion and sex. Now students who attend schools segregated on both these lines remain eligible to receive benefits, even though antidiscrimination laws commonly prohibit discrimination on grounds of religion or sex.
Illustration by Barbara Kelley
This particular statute gave umbrage to a group of taxpayers who challenged its constitutionality on the ground that its tax credit created an illegal establishment of religion in violation of the First Amendment. On the merits, the case raises a set of challenges that are well worth resolving. Unfortunately, the Supreme Court never delved into those challenges. Instead the majority of the justices parried on the ground that the taxpayers did not have "standing" under the Constitution to challenge what they claim are public subsidies to private religious institutions. The taxpayers in this case did not have standing because they themselves were not harmed.
This technical standing issue does not appear to have any political valence, but appearances can deceive. This issue gave rise to two indignant editorials, one from the Wall Street Journal that applauded the decision on the ground that it insulated religious institutions from judicial attack. The other was from the New York Times and it denounced the decision, as it happens, on the same ground. Clearly there is a clash of worldviews. But both these editorials get matters wrong to the extent that they eagerly conflate the standing issue with a decision on the merits of the case.
To see how this dispute evolved, note that it was the five conservative judges who barred the door to the suit over the strenuous protest of Justice Elena Kagan whose dissenting opinion on behalf of the four liberal judges insisted that the suit should go forward. And therein lies the irony: any small-government libertarian has to line up four-square with the liberal justices on the right of citizens and taxpayers to attack public benefit programs that they think lie outside the proper government purview. Indeed the conservatives’ logic on standing is riddled with textual inconsistency and historical error.
On the merits, the case raises a set of challenges that are well worth resolving. Unfortunately, the Supreme Court never delved into those challenges.
To see why, it is necessary to begin with the relevant text of the Constitution, which holds, in Article III, that "the judicial power shall extend to all cases, in law and equity." The question is whether Article III is a worthy home for the "standing" doctrine, which asks whether a particular party is in a position to challenge the allegedly wrongful government conduct. But the term "standing" is nowhere in Article III, which appears to confer very broad powers on the Court. "All" and "extends" don’t sound like restrictive words to me.
Nonetheless, in the majority opinion, Justice Anthony Kennedy followed established doctrine over an intellectual cliff by insisting that the standing doctrine follows ineluctably from the term "case," which is said to restrict the parties who can sue to those who have some distinct interest above and beyond the interests they share with the rest of the public. That position makes perfectly good sense for all courts, not just federal courts, in cases that feature a specific injury to a particular person who is, say, run over by a bus or left in a lurch by his contractual partner. If the harm to one person stands out, that person alone should sue, to the exclusion of all individuals who claim some indirect harm.
It is, however, a whopping non-sequitur to assume that all suits fall into this mold. Often the exact opposite is true. Frequently, cases arise where many persons in a common venture all suffer proportionate harm. Those cases did not escape the Framers’ contemplation. Note that the constitutional text contains the somewhat mysterious phrase of cases in "law" and "equity." Justice Kennedy treats these two types of cases as being cut from the same cloth, even though the two types of cases are often quite distinct.
Thus, courts of equity have often provided remedies to large numbers of individuals, none of whom have suffered any distinctive harm. For example, shareholders of a corporation or members of a fraternal organization may complain that key officers have sold valuable collective assets for a song to their family and friends. None of these individuals suffer a distinctive injury, yet any member of the group is allowed to sue the wrongdoers for the entire class. If the suit is successful, the court unravels the uneven transaction for the benefit of all. Thereafter, the individual party who propelled the litigation receives compensation for his efforts from the money that is returned to the collective treasury.
What Justice Kennedy fails to explain is why this well-established mode of legal activity cannot be applied in federal cases. After all, suits of this sort are allowed against municipal and state governments who make transactions that exceed their statutory powers. So why not allow the same kinds of action in federal courts? Rather than answer this question, the conservative justices cling to the notion that Article III contains some hidden limitation on judicial power in the words "case" or "controversy." It takes a tortured linguistic approach to discern a limitation on judicial power in the phrase "extends to all cases, in law and equity."
It would have been nice to report that the four dissenters had invoked this alternative vision of judicial power to let the Arizona suit go forward. Rather than taking on the larger question of standing head on, however, they examined the one area in which the standing doctrine deviates from its hard ban on taxpayer suits—under the Establishment Clause. Justice Kagan wrote a bruising and effective narrow opinion to show that it is economic fantasy to posit any workable constitutional distinction between tax credits and direct government appropriations.
It takes a tortured linguistic approach to discern a limitation on judicial power in the phrase "extends to all cases, in law and equity."
On this economic point, she correctly bashes the majority’s insistence that the tax credit "does not injure objecting taxpayers, because it does not extract and spend [their] funds in the service of an establishment." What? To this argument, the obvious response is that so long as some taxpayers can reduce their support levels for common services, they receive a subsidy from those forced to shoulder a larger share of the burden. The mechanism does not matter. The net transfer does.
It hardly follows, however, that we should conceive of Kagan’s position as though it were somehow a liberal decision. Taxpayer standing is appropriate whenever any government action is said to violate constitutional norms. Indeed, in the first of these sorts of cases, the 1923 decision in the companion cases of Massachusetts v. Mellon and Frothingham v. Mellon, the Supreme Court through Justice George Sutherland held that neither the state of Massachusetts nor one of its citizens could challenge the Maternity Act on the ground that the federal government spent money for ends that were outside the limited purposes authorized under the Constitution. In this instance, the standing doctrine rebuffs a perfectly sensible (and at the time correct) challenge to a liberal program. The lesson is that standing is in and of itself not a conservative or liberal doctrine. It should never be used to block challenges from either the right or the left.
So with the standing issue out of the way, we reach the merits of the case. What next? On this score, due attention has to be paid to that elusive word, "subsidy." The argument against this program is that those who oppose religious subsidies are forced, through these credits, to subsidize those who support them. The argument here presupposes that a greater fraction of religious individuals participate in the program than nonreligious persons. The point may be true, but if so, the opponents of religion can even the gap by stepping up their own contributions. But even if they don’t, the one result that cannot be right is to allow tax credits for the contributors who support secular programs while denying them to contributors who support religious ones. Take that position, and now religious believers necessarily have to subsidize their more secular brethren.
Arizona Christian is thus a close case on the merits. Perhaps the best course of action is to sustain the STOs because they have the great virtue of encouraging decentralized support for education that helps to undermine the public school monopoly. It is unwise to be dogmatic on an issue that cries out for analysis. So why leave the issue unsettled when all would be better off if the Supreme Court decided this question on the merits? There’s no great virtue in hiding behind a standing doctrine that neither sets precedent nor informs the public debate.