Arizona Christian School Tuition Organization v. Winn

Background

Arizona allows dollar-for-dollar tax credits for donations to school tuition organizations (STOs). STOs use donations to give scholarships to students at private schools, many of which are religious. A group of Arizona taxpayers sued, saying the tax credit improperly subsidizes religion in violation of the Establishment Clause. Lower courts, including the Ninth Circuit, found the taxpayers could sue under the Flast exception; the Supreme Court took the case and addressed whether the taxpayers had federal-court standing.

Reasoning

The Court explained that ordinary taxpayers lack standing to challenge government spending and that Flast creates a narrow exception when a law both uses the taxing-and-spending power and directly "extracts and spends" tax money for religion. The majority concluded Arizona’s STO credit differs from a direct government expenditure because contributions come from private citizens, not extracted from the State’s coffers. The Court found causation and redressability too speculative and held the taxpayers did not meet Flast’s narrow test, so the suit must be dismissed for lack of jurisdiction.

Real world impact

The decision makes it harder for taxpayers to challenge state tax credits that fund private or religious schooling; such challenges will often be dismissed for lack of standing. People with direct, particular injuries (for example, students or parents directly affected) may still sue. The dissent warned that the ruling could let governments avoid review by shifting subsidies into the tax system and noted Arizona’s program cost nearly $350 million in lost revenue.

Dissents or concurrances

Justice Scalia (joined by Justice Thomas) concurred and would overrule Flast entirely, while Justice Kagan (joined by three others) dissented, arguing the majority’s appropriation–tax credit distinction is arbitrary and will undermine judicial review of religious subsidies.