MUELLER v. ALLEN
A Minnesota law allowed taxpayers to deduct from their state income tax expenses incurred in providing tuition, textbooks, and transportation for their children's elementary or secondary school education. Parents who sent their children to parochial school also qualified for the deductions.
Did the law violate the Establishment Clause of the First Amendment?
Legal provision: Establishment of Religion
No. The Court held that the law did not have "the primary effect of advancing the sectarian aims of the non-public schools," nor did it "excessively entangle" the state in religion. Most importantly, argued Justice Rehnquist, the deductions were available to all parents; in effect, Minnesota did not "confer any imprimatur of state approval" on religious schools. Thus, the law passed the Court's three-pronged test announced in Lemon v. Kurtzman (1971) used to evaluate claims regarding the Establishment Clause.
ORAL ARGUMENT OF WILLIAM I. KAMPF, ESQ. ON BEHALF OF THE PETITIONERS
Chief Justice Burger: We will hear arguments first this afternoon in Mueller and Noyes against Allen.
Mr. Kampf, you may proceed whenever you are ready.
Mr. Kampf: Mr. Chief Justice, and may it please the Court:
Minnesota has adopted a comprehensive scheme for compulsory free public education which is embedded in its constitution.
Over 730,000 students presently attend public elementary and secondary schools in the State of Minnesota.
Minnesota prohibits tuition and fee charges for required educational courses for students attending public schools.
Over 91,000 students presently attend private elementary and secondary schools in Minnesota.
Of these, 96 % are in schools whose primary function is the inculcation of religion.
All of these schools--
Unidentified Justice: Are you speaking of the primary schools?
Mr. Kampf: --Primary and secondary, Mr. Justice.
Unidentified Justice: Primary and secondary.
You say their function is to inculcate religion or does not the State of Minnesota require certain basic... the same basic standards as for all public schools?
Mr. Kampf: Mr. Chief Justice, my understanding from this Court's prior rulings in Lemon and Nyquist was that the Court believes that the primary function of a religious school is to inculcate religion through the educational process.
And, I am simply giving--
Unidentified Justice: Do you understand the Court to have laid down some abstract kind of rule of law about numerous different kinds of parochial schools or private schools; that you don't need record support any more for a particular factual conclusion?
Mr. Kampf: --Mr. Justice Rehnquist, my understanding is that the 96 % of the private school students who attend religious schools are schools that identify themselves as religious schools, and as I believe the Court previously found, those schools' primary function then is to teach religion.
Unidentified Justice: You mean found about these particular schools in Minnesota?
Mr. Kampf: No.
Unidentified Justice: Are you suggesting they are just all homogenized, that if a school is identified as a religious school, as you put it, it is automatically... Its primary function is to inculcate religion?
Mr. Kampf: Yes, I believe that would be the teaching that I have taken from the Court's decision in Lemon and Nyquist.
The statute in question permits parents of both public school children who do not incur tuition and parents of sectarian school children who do to deduct expenses incurred for tuition up to $500 for grades K through 6, $700 for grades 7 through 12 from their taxable income.
In addition, deduction for textbook and transportation expenses are permitted even though Minnesota already provides equal amounts of textbooks and transportation to students in both public and parochial schools.
Unidentified Justice: Are they all private schools or just church-sponsored schools?
Mr. Kampf: Well, Mr. Chief Justice, I refer to parochial schools as a result of the fact that it is such a high percentage, that is to say the 96 %, that the remaining 4 %, which would be deemed to be non-sectarian, would pay out until insignificance.
Obviously by that I mean all private school students--
Unidentified Justice: What about a private school that has no church sponsorship?
Mr. Kampf: --They would receive the same benefits as those that have church sponsorship.
Unidentified Justice: Mr. Kampf, how much of these two deductible amounts have been increased since 1956?
Mr. Kampf: The original was $200.
It was changed in 1976 to the present levels of $500 and $700.
However, there have been bills in every biennial session of the legislature since to increase it as much as 100 % from that level.
Unidentified Justice: Those bills have not carried?
Mr. Kampf: They have only carried one House at a time up to this date, Mr. Justice Powell.
The total of tuition and fees paid to public schools in Minnesota by over 800,000 students in the fiscal year 78-79 was approximately $2 million.
This would include driver education charges.
The total of other fees paid to the public schools in that year, some of which would be deductible and some of which would not, was only approximately $900,000.
By contrast, the total amount deducted under the statute in that same year was over $19 million.
The only other deductible expenses, other than the $2.9 million I previously alluded to for public school students' families, would be relatively minor amounts such as pencils, supplies, and athletic equipment.
This statute represents an attempt to do that which this Court has previously prohibited in the Lemon and Nyquist cases.
The statute advances religion in that its effect is to subsidize an activity intented to inculcate religion.
Petitioners ask the Court to simply apply controlling constitutional standards firmly rooted in prior decisions as set forth in the Nyquist case.
Unidentified Justice: Would you challenge the deductions of... the deductibility of contributions to such schools?
Mr. Kampf: No, that is not at issue in this case, Mr. Justice.
Unidentified Justice: Well, I just asked you, would you think they would be questionable under your thesis?
Mr. Kampf: Not--
Unidentified Justice: Are these deductions subsidies, deductions of contributions?
Is the right of a donor to deduct contributions to a religiously sponsored school a subsidy?
Mr. Kampf: --As I would indicate later in my argument, Mr. Justice, the deduction of a contribution which comes out of volunteerism is vastly different than a deduction of a fee for a service.
Unidentified Justice: No.
What is the answer to my question?
Mr. Kampf: I don't believe that this case in any way affects that and I don't believe that deductibility of the contribution to the school would be in question, no, Your Honor.
Unidentified Justice: And, your submission wouldn't put those in question?
Mr. Kampf: No.
This only relates to a fee for a service.
This case, we believe, is--
Unidentified Justice: Do you think there is a constitutional difference between the two?
Mr. Kampf: --A vast difference.
I think that the Court in Nyquist seemed to indicate that a deduction for a fee for a service is a direct subsidy of the service itself not unlike the deduction for medical services which is clearly a subsidy of good health services.
The distinction was in the prohibition--
Unidentified Justice: I suppose you could run the argument either way, that this deduction would be even more clearly constitutional than just a contribution to support religion.
Mr. Kampf: --The difference--
Unidentified Justice: This deduction has to do with supporting an educational performance as well.
As far as you know, just deducting a contribution could be wholly for religious purposes.
Mr. Kampf: --The distinction between a deduction for a fee for service and the deduction for a voluntary giving is in the quid pro quo; that is to say the donor receives back the religiously-oriented educational services which would not be present in the voluntary contribution.
The voluntary contribution, there is no quid pro quo whatsoever.
We believe that there are four ways that this case is controlled by Nyquist, Lemon, and Tilton.
First, the effect of this statute is entirely disproportionate and overwhelming in its benefit to religious education.
Second, it violates the establishment clause due to the unrestricted nature of the subsidy inherent in the law.
Third, as in Nyquist, it violates the establishment clause because it permits a deduction of a fee for a specific service which is inherently religious.
And, fourth and lastly, like the aid in Nyquist and Lemon, it would require an impermissible entanglement of the state in religion, both in order to administer and fund it within constitutional limits.
With regard to disproportionality, the benefits of this statute flow disproportionately to students attending parochial schools.
Since common sense dictates that the major educational expense is tuition, Minnesota's equivalent of tuition for public schools is its foundation aids which this year are over $1400 per pupil.
As can be seen from the facts in this case, the overwhelmingly largest form of aid in this case is the deduction for tuition.
This deduction is analytically indistinguishable from the aid allowed in Nyquist.
Unidentified Justice: Mr. Kampf, suppose the state, instead of allowing the tax deduction, had simply given... decided not to run public schools at all and just gave a voucher to the parents and let them send their children to whatever school they wanted.
Is there a problem with that?
Mr. Kampf: That case is not before the Court and--
Unidentified Justice: I know that.
But, do you see a problem?
Mr. Kampf: --I believe that presents some very substantial, different and more sophisticated problems than this case.
In the first instance, the fact that the Minnesota Constitution requires a free public education for those who desire it is, I believe, distinguishable under the circumstances since it does not require the funding of private or religious school education.
Unidentified Justice: Well, would you concede that a voucher system would be constitutional?
Mr. Kampf: No, I would not.
I believe that the voucher system would have the same effect in Minnesota as the deduction; that is to say the funding primarily of religious education.
As the state's own revenue analyses from 1976, 1978, and 1980 indicate, the state has known throughout that the primary benefit under this statute is the tuition deduction.
Although Minnesota points to a broad class that benefits in theory from the deduction, the deductible non-tuition expenses are plainly insignificant in relation to tuition.
As the First Circuit indicated in the Norberg case, they are a mere window dressing.
Any lack of evidence on this point results from the choice by the state not to require taxpayers to disclose the specific nature of the expenses deducted as the forms appended to the briefs make quite clear.
Even without that information, however, the facial availability of the tuition deduction only puts sectarian students into a very small number of non-sectarian private school students suffices to establish impermissible effect under Nyquist.
With regard to the lack of restrictions on the aid, the subsidy resultant from this deduction is without restriction and thereby falls afoul of the limits created in Lemon and Nyquist.
The flaw lies in the availability of the aid for diversion to religious uses such as the repair of school chapels as was true in Nyquist.
Even when the aid is permitted, as this Court permitted in Tilton, requirements have been made that no tax monies flow to religious activities as in the striking down of the 20-year limitation in that case.
Even a subsidy neutral on its face must be restricted when granted to a religious institution, a limitation which this statute fails to meet.
Unidentified Justice: Well, this subsidy, you say, is a deduction?
Mr. Kampf: That is correct.
It is a subsidy in the form of a deduction from tax.
Unidentified Justice: You just told me you wouldn't question an ordinary deduction for a contribution to a religiously-oriented school.
Now, those... There is no requirement that those contributions not be for a religious purpose, is there?
Mr. Kampf: Well, as I indicated, to not tax under those circumstances is the same as to not tax any other idiohomogenary contribution.
Unidentified Justice: Exactly.
I agree with you.
Mr. Kampf: But, here, there is an exchange in effect then.
The deduction under the statute is a discount or a rebate on tuition.
Unidentified Justice: Well, arguably, the state is getting something for its grant here in a way that it isn't when it just lets you deduct and it doesn't get anything in return.
Mr. Kampf: Well, the answer to that is that the public schools in Minnesota, I believe, are open to all people.
All children in the state must receive, by the Constitution of Minnesota, a free public education.
Unidentified Justice: You are not suggesting though if everybody who was going to private school went to public schools it wouldn't cost the public some money?
Mr. Kampf: Well, I think the question--
Unidentified Justice: Would you?
Mr. Kampf: --No, of course not.
Unidentified Justice: All right.
Well, then, the public is getting a benefit?
Mr. Kampf: That is an indirect benefit which I think the First Amendment requires the public to bear by having free public schools.
There is nothing in this statute that restricts the deductibility of field trips, tests, maps, globes, instruction materials or religious instruction itself through the tuition deduction.
To allow this pirouette around Lemon and Nyquist is to render them meaningless.
Just as states may not provide direct aid to religious schools, they may not provide such aid indirectly by tax deductions and credits, as I believe Nyquist so firmly held.
With regard to the fee for service, I believe that the Court held in Nyquist the deduction of fees for services is a direct subsidy of the service, as I indicated previously, in effect, a discount or rebate.
This is, I believe, directly analogous to the medical services deduction which parenthetically Congress has recently reduced in order to reduce the amount of medical care consumed.
The comparison would be to take the other forms of medical subsidy and compare them to that form of subsidy for religion present here.
That is to say Medicare and Medicaid are direct subsidies of health services.
If the State of Minnesota were to fund a program similar to Medicare and Medicaid for religious education, quite clearly under the Lemon case this Court would strike it down.
The effect then of this statute is the same as in Nyquist; that is to say the taxpayer acts in either case in anticipation of receiving the benefit of the deduction, thereby subsidizing attendance at a religious school by deducting the fees charged for it.
Lastly, this deduction impermissibly entangles the state in religion in two ways.
First, if the state were to undertake the duty Tilton and Lemon establish of insuring that expenses deducted are not for services or materials used in the teaching of religious tenants, then comprehensively entangling audits of tax returns would be required, a task the state has quite obviously already failed at as even a cursory examination of the Minnesota tax returns were revealed.
Unidentified Justice: Does the record in this case, Mr. Kampf, show what is the actual cost per capita to education children in the private schools or in the parochial, church-sponsored schools?
Mr. Kampf: The only thing we have in the record would be the national averages of $500 to $700 in tuition, not the actual cost, Mr. Chief Justice.
We don't have anything in the record with regard to the actual cost of such--
Unidentified Justice: It must be a great deal more than $500 or $700.
Mr. Kampf: --I would assume so or they wouldn't be receiving much of an education, I imagine.
Unidentified Justice: That figure should not be difficult to ascertain and could have been put in the record by taking the total cost of the primary and secondary schools and dividing it by the number of pupils.
Mr. Kampf: Unfortunately with regard to private schools, I don't believe that information--
Unidentified Justice: I am just talking about the public schools.
Mr. Kampf: --Oh !
In the public schools, the foundation aids this year in Minnesota are approximately $1400.
It is actually called a pupil unit.
So, we can surmise that the expense of education in the public schools was something slightly in excess of that number.
Unidentified Justice: So that the $500 or $700 doesn't cover the entire cost?
Mr. Kampf: No.
No more so than the subsidies present in Lemon or in the repair subsidies present in the Nyquist case.
The tuition deduction itself does not permit examination of the cost as I indicated was true in Lemon and Nyquist, without entering into an investigation of the school itself, a procedure which I believe would be more damaging to the religious function of the school than it would be to the state.
Similarly, since the textbook and transportation expense is deductible or for expenses over and above those already provided equally to public and private school children and since the State of Minnesota prohibits charging for textbooks in the public schools, the textbook and transportation deductions may well be for something beyond secular needs of the students.
Again, without entanglingly audits which the state does not undertake, an impermissible danger exists that the state is aiding religious activities despite the facial prohibitions of this statute.
The second form of entanglement is with regard to politics.
The State of Minnesota has been undergoing a fiscal crisis.
During the past year, the Minnesota legislature has had to cut aid to public schools twice.
Despite those substantial cuts, this deduction and the subsidy inherent from it has not been affected in any way.
As I indicated previously, in every legislative session--
Unidentified Justice: Well, maybe the legislature feels that private schools are doing a better job than the public schools.
Mr. Kampf: --That is quite possible.
Unidentified Justice: That is certainly a logical inference from the fact you just stated, isn't it?
Mr. Kampf: I assume it is quite possible, Mr. Justice Rehnquist, but I am not sure that the First Amendment would permit that.
Unidentified Justice: It wouldn't permit the State of Minnesota to feel that private schools were doing a better job than public schools?
Mr. Kampf: To fund them is what I am discussing, Mr. Justice Rehnquist.
Unidentified Justice: Mr. Kampf, you suggested the financial crisis in Minnesota.
Would that crisis be benefited or augmented if all the parochial schools were closed up?
Mr. Kampf: I don't think there is anything in the record of this case or any other case--
Unidentified Justice: What does your common sense tell you?
Mr. Kampf: --That... Obviously, if all the parochial and private schools of the State of Minnesota or of any other state closed, it would cause great economic hardship on the state.
Unidentified Justice: But, you were talking about a financial crisis contributed to these deductions.
Mr. Kampf: I don't think--
Unidentified Justice: It cost the state $2,400,000 did you say?
What is the annual cost?
Mr. Kampf: --That was in 1978.
I believe that the costs more recently... The last numbers that I saw of an estimate were $15 million for the biennium that is presently going to end June 30th.
Unidentified Justice: Is that in loss of taxes to the state?
Mr. Kampf: Yes.
Unidentified Justice: What is the two million four?
Mr. Kampf: That was the loss of taxes in 1978.
Unidentified Justice: And they increased to $17 million?
Mr. Kampf: For biennium.
That is for two years.
Minnesota operates fiscally on a biennium.
Unidentified Justice: What is the total budget for public education in Minnesota?
Mr. Kampf: I am not sure of that, Mr. Justice Powell.
I believe it is in the billions.
Unidentified Justice: Did you say the pupil cost... What did you say, $1200, $1400?
Mr. Kampf: In excess of $1400.
Unidentified Justice: In excess of $1400.
What percentage of the total school population was attending sectarian schools in 1956 when this statute was enacted?
Mr. Kampf: I don't have those figures.
The only figures that we have available are for the period from 1976 to the present and during that period of time they appeared to have increased substantially.
Unidentified Justice: What do you mean by substantially?
Mr. Kampf: Well, the numbers in sectarian schools appear to have remained stable, slightly risen, from 85,000 to 91,000, while the number of students attending public schools between 1978 and the present have reduced from... I think it was 815,000 to 730,000.
Unidentified Justice: Do you know what the figures were, do you have an estimate in 1956?
Mr. Kampf: No, I do not have any knowledge of what was true in 1956.
Unidentified Justice: The annual reports of the State Board of Education would show, wouldn't they?
Mr. Kampf: Yes, I am sure that they would.
Unidentified Justice: Do you agree that the state has a substantial interest in the preservation of non-public schools to afford a choice?
Mr. Kampf: I believe that the state has an important interest in not being hostile to the continued existence of private and parochial schools.
Unidentified Justice: Is that what Nyquist said?
Mr. Kampf: I believe that is what the Court held in Nyquist; that there should not be any hostility to the continued existence of those schools.
And, where aid was possible in a mutual fashion, not true in this statute, as was true in Everson and Allen.
I think the distinction between this statute and Everson-Allen deductions is quite... a) it is quite clear from the fact that in the Marburger case, summarily affirmed by this Court, a subsidy in dollars for textbooks was disallowed because there was no control, no guarantee of secular nature of the aid.
That certainly is not present in this statute.
There is no guarantee.
Unidentified Justice: I think you... Are you finished, Justice Powell?
For the moment.
I think you referred to this subsidy, as you have described it, as an indirect aid to religion.
Mr. Kampf: Well, it is a direct aid in the sense of it being a discount or rebate on the cost of religious school education.
Unidentified Justice: Well, now, in Walz the Court held that contributions to churches were constitutional, the allowance for a deduction was.
Now, that, of course, is a very direct aid to a church, is it not?
Mr. Kampf: Well, as I understood Walz, it was an exemption from property tax of the church buildings itself.
I think the distinction between the Walz exemption and the deduction of user fee here lies, as I indicated, with the fact that Walz was dealing with a historically embedded, more than 200 years of history, of non-hostility and protection of church and other idiohomogenary institutions from hostile taxation.
This is not the same.
Unidentified Justice: It surely is a very direct aid to a church, is it not?
Mr. Kampf: --Well, again, the distinction lies in the giver.
Here, there is an exchange, a quid pro quo between the giver of the money who receives through their child a service, religious education.
Unidentified Justice: Do you suggest that the churches give nothing to their parishioners?
Mr. Kampf: Well, I don't know that it is something that the courts of the United States have ever measured nor one that one could place in a quid pro quo; that is to say an exchange.
At least I don't believe that any religion thus far has indicated it is an exchange dollar for dollar for some service.
I think that what we are discussing here is an exact dollar for dollar, in effect, service; that is to say the religious education flows to the child of the giver of the dollars who then deducts them.
I think it is more analogous to the medical deduction or home interest deduction.
I would like to reserve my remaining time for rebuttal.
Chief Justice Burger: Mr. Blomgren?
ORAL ARGUMENT OF DOUGLAS C. BLOMGREN, ESQ. ON BEHALF OF THE RESPONDENT
Mr. Blomgren: Mr. Chief Justice, and may it please the Court:
The issue in this case is whether by exempting that portion of a taxpayer's income which has been devoted to the general educational expenses of his or her children.
The State of Minnesota has adopted legislation respecting the establishment of religion.
The statute was adopted in 1955 and, as Mr. Justice Powell's questions elicited, it was amended in 1976 to include within the ambit of the deductions certain textbooks and materials which before that time were not covered by the deduction.
It was again amended in 1978 to assure that the deduction was taken for those expenses related to curricular activities rather than extracurricular activities.
The challenged deduction does not result in a straight $500 benefit or a straight $700 benefit, rather it constitutes a deduction against the income of a taxpayer in calculating taxable income.
As a matter of fact--
Unidentified Justice: Mr. Blomgren, to that extent, all of the taxpayers of the state share, do they not?
Mr. Blomgren: --Certainly they do.
Certainly they do.
And, it is that broad class of beneficiaries which we have said is a crucial part of this particular deduction.
It was that point which was relied upon by the three judge district panel which upheld this statute originally in 1978 and by the District Court and the Eighth Circuit Court of Appeals which upheld it again when it was challenged in 1980.
Now, in assessing the validity of this statute under the Establishment Clause, it is very important that the Court keep foremost in mind that the central prohibition of the Establishment Clause is the singling out of religious organizations or religious groups for direct assistance.
The question of whether or not a statute provides direct assistance is crucial because it is that type of assistance which denotes sponsorship, advancement, a relationship between the state and the religious institutions of the state which is one of sponsor and sponsored.
It is also a symbolic matter that this Court recognized in Grendel's Den whether or not then state has entered into a sponsorship relationship with religion.
It is also important whether or not a statute singles out any particular group or any particular type of institution for benefits, because the Establishment Clause requires neutrality, it requires that legislatures adopt laws which neither advance nor inhibit religious institutions, and to the extent that broad classes of beneficiaries have been identified under a statute it indicates that any religious benefit is incidental to that broad classification.
The plaintiff suggests that this case is controlled by Nyquist, but the differences between this case and Nyquist are the differences which lie at the heart of the Establishment Clause.
Unidentified Justice: Then you are not asking that Nyquist be overruled?
Mr. Blomgren: We are not, Your Honor.
We submit that Nyquist was properly decided and can stand equally beside this case.
Unidentified Justice: I would like to have you explain the differences between this case and Nyquist.
Mr. Blomgren: Okay.
Nyquist involved two types of programs.
The first was a direct transfer of monies from the state treasury to low-income people, approximately $50, essentially in exchange for enrolling their children in non-public schools.
Coupled with that was a very careful--
Unidentified Justice: One can certainly say that that was true here at least indirectly.
Mr. Blomgren: --Your Honor, if it can be said that it is true, it is going to have to be extremely indirectly, because what the legislation--
Unidentified Justice: Explain that, then.
Mr. Blomgren: --Okay.
What the legislature has said is that for those actual expenditures incurred by a particular taxpayer in educating his or her child either in a public or private school, if they actually incurred those expenditures, then it is going to be treated as a reduction in one's net income in arriving at one's taxable income.
Essentially what the legislature has said is that we are going to acknowledge the fact that educational expenses, regardless of where those monies are paid, constitute a reduction in available income, in disposable income, in much the same way that payments to physicians or--
Unidentified Justice: So that the rich man's son who goes to St. Paul's Academy in your city gets the same benefit on his parents' return?
Mr. Blomgren: --Your Honor, as with any deduction, there is going to be a disparate effect with regard to the amount of money one actually pays and their particular income.
That is inherent in a deduction under a progressive income tax system.
Just as if someone chooses to pay far more money than his neighbor to physicians or for mortgage payments and that person has a higher income, they are going to receive a larger deduction and they are going to be in a substantially different position than those who pay less.
But, that has to do with whether or not deductions under progressive income tax system are wise or not.
But, it doesn't implicate Establishment Clause values, because it is not a distinction made upon religious lives or the singling out of religious institutions or those attending those institutions, but rather is a long, traditional line of income and expenditure which are the classic definitions, classic classifications used in an income tax system.
Unidentified Justice: While I have you interrupted, let me ask you something about your textbook deduction.
Actually you had most of this under Allen anyway, didn't you?
Mr. Blomgren: --As a matter of fact that is true.
There is an Allen type provision of textbooks to both public and private students.
Unidentified Justice: Well, then, your Minnesota deduction really gives the parent on the textbook end something that he wouldn't have had under Allen?
Mr. Blomgren: --Okay.
First, one must assume that textbooks, secular textbooks, which would fall under deduction, are generally being provided throughout.
They are generally being provided.
So that it is unlikely that they are going to be major amounts of deductions taken which are attributable to textbooks.
Unidentified Justice: But, what bothers me with the argument on both sides is it seems to me you are arguing statistics and I think we really ought to be arguing basic principles.
Mr. Blomgren: I agree, Your Honor, that we ought not be arguing statistics beyond a particular point.
It seems to me that the crucial statistics are those which identify whether or not the nominal class provided by the statute actually does result in real and substantial benefits across that class.
And, once it has been established that, by statistical analysis if that need be, that benefits to those in public schools are not illusory, it seems to me then that the classification system has been proven to be neutral and does not result in direct assistance to any specialized class.
Unidentified Justice: Now may I get back to my question about--
Mr. Blomgren: About Nyquist, yes.
Unidentified Justice: --No, about Allen.
Mr. Blomgren: Oh, I am sorry.
Unidentified Justice: --and the additional items which your statute gives that you don't already have under Allen.
And, my second question, of course, there is is it not then benefiting parochial school students?
Mr. Blomgren: Your Honor, there is included within the ambit of deduction of materials beyond textbooks.
Those will include things such as art supplies, home economics, shop supplies.
They will include gym uniforms, tennis shoes.
They will include very mundane items such as pencils, paper, notebooks, all of which are deductible.
The provision of a deduction in that particular case, however, doesn't provide any state sponsorship of those expenditures.
There is no money being transferred out of the legislature here so that those things will be provided.
Thus, it is entirely unlike those provisions where a particular equipment is being supplied by the state.
These are all being supplied by individual expenditures and there is no transfer of money by the state.
It is also important to know that under Section 170, a wealthy benefactor might buy these same materials, receive a deduction for them and make them available to those attending sectarian schools.
There the Court, it appears to me, is not likely to say that that would constitute state or federal sponsorship.
The religious institutions that may benefit simply because a wealthy person has provided a fund for those students to use in buying books, in buying materials, or even in paying tuition.
There are also benefits available to public school students under that textbook expenditure.
As we have indicated, materials such as personal items, personal physical education items, and it is this type of expenditure that is not taken into consideration by the statistics that the plaintiffs have presented.
They assume in all their briefs below and in the brief before this Court that any benefit to those attending public schools must be de minimus.
But, there are about 800,000 public school students and if a small percentage of those people took deductions for relatively minor amounts, the statistical analysis would be completely different, vastly different, than what has been presented by the plaintiffs so far.
Unidentified Justice: I am puzzled about that because isn't the whole purpose of the statute to provide support for the private sector and keep the other school system alive and to the extent that money is funneled into the people that go to public schools, it really is kind of incidental, isn't it?
It doesn't serve the major purpose of the statute, let me put it that way.
Mr. Blomgren: Your Honor, the major purpose of the statute is to assure... There are several purposes of the statute, but one of them is to assure that there is an availability of choice that individuals can make as to whether to attend or not.
It is also a legislative recognition that the income devoted to educating one's child does constitute a drain which can equitably and reasonably be recognized by the legislature in identifying taxable income much the same way when you expend money on medical assistance or things of that sort.
The legislature is going to recognize that in calculating taxable income.
So that there are benefits and the purpose of the statute is pursued to the extent that there are benefits available for public school students as well.
It also seems to me too that even if the purpose were limited solely to maintaining the continued viability, if you will, of private schools so long as there is not a primary effect which advances religion, that purpose certainly is not going to be considered and invalid sectarian purpose.
Many of the cases that this Court has reviewed and many of the types of programs that it has already upheld relate solely to those people attending private schools, non-public schools.
A very good example most recently are those benefits that were available to the non-public schools in the Regan case where reimbursements for taking attendance, for administering tests, for grading tests were all valid and that is even where you have a purpose that is clearly aimed only at non-public schools.
I don't think that is the case with regard to this particular statute.
The plaintiffs do suggest that in a 1976 Revenue Memorandum prepared by a staff member of the Department of Revenue, and it is dated several days after the effective date of the legislature, but I understand there was one before the effective date of the law, but it is my understanding that there was another one floating around before that time, suggests that the benefits are only available to those attending non-public schools.
That memorandum represents an attempt by the Revenue Department to say these are the figures we can get, we are going to assume it is only for tuition.
If there is anything that showed what actually is going on and what their effect of the statute is it is going to be the more recent data submitted by the Revenue Department which, as the Justice Department's amicus brief indicates, over 204,000 dependents were represented by that deduction and at that time there were only about 90,000 sectarian students.
So that the majority of those people taking the deduction are actually not attending sectarian schools.
That, it seems to me, is a clear indication of the broad effect, the broad availability of the deduction.
Unidentified Justice: Does the record tell how large the deduction was that they took?
Mr. Blomgren: No, it does not.
Unidentified Justice: It may be $5.00 for each or something like that.
Mr. Blomgren: Yes.
It does not, although that is definitely a shortcoming in the statistics, but it is not a material one, because--
Unidentified Justice: Well, is it likely that a parent of a public school child would have $500 of non-tuition expenses that would be deductible?
Mr. Blomgren: --Your Honor, it is possible that those attending public schools may.
For instance, those--
Unidentified Justice: It may be possible, but you are talking about 100,000 people in your example.
Mr. Blomgren: --That is right.
Unidentified Justice: Do you think 100,000 of them had a $500 deduction?
It seems very unlikely.
Mr. Blomgren: It is very unlikely that 100,000 of them have a full $500 deduction.
But, it is also unlikely that all of those people attending sectarian schools or non-public schools will have maximum deductions as well.
In order to achieve that calculation, you have to assume that all private schools charge tuition and I think it is fairly clear that there are some who provide or charge on a basis of whether one can afford it, to what degree one can afford it.
The decisions of this case clearly indicate that extensions from taxation do not constitute the active sort of assistance which traditionally has been thought to constitute state sponsorship of religion.
This was true in the Walz case where property tax exemption was found not to constitute any active sponsorship of the religious institution.
And, it is based upon several factors which go to the very heart of the Establishment Clause and go to the very nature of tax deductions.
When a state government determines to abstain from taxing income devoted to particular activities, it has not transferred any state money from the treasury to any particular individual or to any particular group.
Unidentified Justice: But, there is no escape, is there, from the fact that every tax deduction, however it is described, whatever its form may be, in effect spreads the burden of that tax deduction over all the taxpayers?
Mr. Blomgren: That is true.
Unidentified Justice: That was true in Walz, was it not?
Mr. Blomgren: Yes, that is absolutely true in Walz.
Unidentified Justice: There are atheists and agnostics and persons of a whole range of non-belief were contributing to a part of the church who received the exemption.
Mr. Blomgren: Your Honor, I don't believe that they are contributing to the support of the church.
What they are contributing to is the support of the state and whether or not the state can identify--
Unidentified Justice: They are making up for the fact that the church property was not taxed, were they not?
Didn't Walz recognize that?
Mr. Blomgren: --Walz recognized the fact that to the extent that some institutions are relieved of the tax burden others will be called upon to pay more.
Unidentified Justice: To pay more.
Mr. Blomgren: But, what is involved at the heart of the Establishment Clause is whether or not the legislature or state government has decided to enter into a sponsorship relationship with the church, advancing its cause by either directing money to an obviously sectarian purpose or singling it out for some particular special kind of benefit.
In Walz it was particularly important that religious institutions fell inside a broader class of non-profit institutions and this case essentially presents the issue of whether or not Walz were limited only to educational institutions.
It would somehow therefore be rendered unconstitutional.
The fact is that those institutions which fall inside the category, the expenditures at those institutions which fall inside the classification system used in the Minnesota deduction constitute all of those expenses that are likely to be incurred or generally are incurred by those attending public or private schools.
It is impossible to identify, I believe, even if we put our minds to it very strenuously, some type of expenditure which public school students incur which does not receive a deductible status, but, which if incurred by private school students would.
Those expenditures which are actually incurred by those in public schools do result in tax deductions.
The benefits that any individual receives under this particular type of deduction are as Justice White pointed out in his question at least more indirect than those an institution would have received under a Walz style tax exemption.
What is going on, for instance, in Section 170 is a direct payment to an institution which qualifies for tax deduction.
Now, the plaintiffs suggests that the fundamental, crucial distinction is between deductions which are received for payments which flow from disinterested generosity and those which flow from payment as user fees.
But, it is impossible to identify a constitutionally significant difference in those.
If, for instance, the purpose of the Establishment Clause is to make sure that the state does not enter into a relationship of sponsorship with a church, then the user fee analysis that the plaintiffs put forth distinguishes between the Section 170 type of direct payment to religious institutions for obviously religious purposes, the building of buildings and payment of fees to clergy, things of that sort, and makes that valid.
It makes it invalid for persons to pay tuition to an institution that provides education to his or her child or if, for instance, we were to say that the Establishment Clause's purpose was to make sure that no one is taxed in order to support a religion other than of their own choosing, we find that the user fee analysis makes another decision that bears no relationship to the Establishment Clause.
What it does is to say that equally indirect benefits to individuals and to institutions are somehow different under that purpose and permits one and invalidates the other.
The plaintiffs use of statistics is also difficult in this particular case, difficult to identify the reasons for which it is material to Establishment Clause analysis.
Their statistics indicate that about 10 % of those attending schools attend sectarian schools in Minnesota and Mr. Justice Powell requested some information about the percentage of those people attending schools earlier.
It is my understanding that the early statistics for which they know the percentage of sectarian students.
It is about 1959 to 1960 according to education data which is issued every March.
In about 1959 or 1960, about 18.7 % of the school student population attended sectarian institutions.
Now, that has plummeted and it is now... was... about 10 %.
I think it has grown to 10.1 or 10.2 within the last year.
And, I apologize for making reference to non-record data, but it appears to be information that you requested.
Unidentified Justice: Why didn't you put it in the record?
Mr. Blomgren: The record--
Unidentified Justice: Didn't you realize it was going to come up?
Mr. Blomgren: --Your Honor, the record consists primarily of information which was supplied by the Department of Education and the Department of Revenue in response to certain requests and by the hard work of--
Unidentified Justice: Don't you have the whole resources of the State of Minnesota to get information and facts?
Mr. Blomgren: --Your Honor, we have facts concerning that portion of the population in the test year which is 1978.
It indicates that 10 % of the people attending school attended sectarian schools.
Unidentified Justice: What is there in the record that will help Justice Powell out?
Mr. Blomgren: In the record--
Unidentified Justice: In the record.
Mr. Blomgren: --Okay.
Unidentified Justice: Zero.
Mr. Blomgren: Your Honor, the record--
Unidentified Justice: You have one figure in there, zero.
Mr. Blomgren: --The record that is contained in there, and it is the record that was submitted by the plaintiffs in this case, suggests the percentage of those attending non-sectarian schools, percentage of... amount of revenue loss, things of that type.
Unidentified Justice: Would the reports of the State Board of Education provide this information?
Mr. Blomgren: The reports of the State Board of Education would show you the general population trends of those attending non-public schools as opposed to those attending public schools.
The revenue data, which is the most recently available, is attached at the end of our memorandum.
It is from a study that was conducted which amicus in support of the petitioners made reference to and which resulted in certain calculations which appear at the back of our memorandum.
But, ultimately... Ultimately, details concerning what particular group of people benefited more or were the predominate beneficiaries under the particular statute is, in our estimation and in the estimation of the District Court and the Court of Appeals, irrelevant.
It is not material to the case.
For instance, if we were to look at which organizations or group of organizations was the predominate beneficiary under Section 170, historically we would find that religious institutions took the bulk of deductions or the contributions to religious institutions received the bulk of deductions.
Similarly, I would suspect, although I am not certain, that religious institutions are also the predominant beneficiaries under Walz style property tax exemptions.
But, those facts are not going to be sufficient to hold that that property tax exemption in Walz or Section 170 of the Internal Revenue Code are unconstitutional.
The reason is that the... The Establishment Clause requires that religious institutions and those associated with religious groups be treated neutrally; that they not be hindered, that they not be advanced, but the Establishment Clause does not require that religious institutions always come out second best or religious always come out second best under any neutral set of criteria.
The plaintiffs have also suggested that it is important in this case that there is no restriction on the tuition fees which may be paid or the textbooks... Excuse me, the transportation uses which will qualify for deductions.
They suggest that because you cannot identify the secular from the sectarian or because the statute doesn't attempt to identify the secular from the sectarian that it is unconstitutional; that we either have a primary effect problem or we are going to have an entanglement problem.
The fact is, however, that those types of... that type of separation is very important when you have direct state assistance, money or goods flowing out of the treasury to individuals or to religious institutions.
When you supply textbooks, when you supply equipment, it is important because of the symbolic sponsorship problem that may arise, that institutions not receive assistance to clearly sectarian activities.
But, we recognize in Walz and under Section 170 that tax deductions are going to be available for people who make direct payments to the institution.
As I have indicated before, Section 170 would permit an individual to supply textbooks, supply Bibles, supply buses to private schools and take a deduction for them.
Yet, if individuals purchase that sort of equipment, that sort of transportation from an institution and spend their own money in much the same way a contributor might, that is going to be unconstitutional.
The difference between them seems to be impossible to reconcile with the purposes of the Establishment Clause, to avoid the sponsorship or the symbolic appearance of sponsorship.
It is also difficult to identify the source of the petitioners' indication that $17 million in revenue loss is attributable to this deduction for the biennial.
I am not certain where the figure came from.
I do know that the Revenue Department estimated for 1980 it was about $4.1 million.
And, although I don't believe it is particularly relevant to the resolution of this case, Mr. Justice Powell asked concerning the budget for public schools and I can only entertain the same type of estimation that was presented here.
The foundation aids formula is based upon approximately $1400 per student and currently there are between 750,000... about 750,000 or 800,000 public students.
So, the legislature anticipates expenditures of approximately 1.2 billion or in excess of a billion dollars for public education.
I am not certain of the actual appropriated funds, because the appropriation says as much money as necessary will be transferred from the treasury to pay foundation aid.
Unidentified Justice: This is the operating budget and does not include capital expenditures?
Mr. Blomgren: Your Honor, there again, I am afraid that I can't tell you precisely how that breaks down.
All I can tell you is the foundation aids formula assumes expenditures--
Unidentified Justice: Do the counties in Minnesota also contribute to public education?
Mr. Blomgren: --There are property taxes paid--
Unidentified Justice: Yes.
Mr. Blomgren: --to districts, school districts, and state aids.
Unidentified Justice: State general revenue funds?
Mr. Blomgren: That is correct.
It is not based on--
Unidentified Justice: You also have federal funds?
Mr. Blomgren: --That is correct.
The primary argument of the plaintiffs and the petitioners here is that Nyquist must control the case.
I think it is important to draw the distinction between Nyquist and this case because the Nyquist distinctions go to the very heart of the Establishment Clause jurisprudence.
The Nyquist case involved benefits where the legislature had identified specific amounts of money it wanted to make available to individuals who had enrolled their children in private, predominately sectarian schools.
It represents a legislative determination that for performing a specific act a specific amount of money is going to be provided to individuals.
In order to achieve that result, a particularly... what shall we say... detailed form of tax table was provided so that if you had an income of less than "X" amount, you were to take... exempt from your income a particular amount regardless of whether that was more or less or any relationship to what you pay to a particular institution.
Now, it is that kind of relationship, the fundamental decision of a legislature to benefit particular individuals for particular acts, which is important to Establishment Clause analysis.
It is also important that the only group who could benefit under the Nyquist provision were those in private schools.
There were no benefits.
If there were expenditures associated with attending public school beyond those which are covered by state payments or public school payments, there is no way that those are going to result in any benefits under the provision there.
And, it is this singling out of a particular group for benefits which are not available across the board, which shows that benefits to religious institutions were not incidental, which shows that there may be problems of political divisiveness, because groups being formed along private lines which become predominately sectarian lines.
Unidentified Justice: Isn't that argument undercut, the deduction for tuition benefits, for tuition payments, because they are not available across the board.
Only those attending private school pay tuition.
Mr. Blomgren: There are about four types of tuition that are actually paid by those people in public schools.
There are those who pay non-resident tuition.
And, in 1978 there were only about 79 people who did that.
But, there are other types of--
Unidentified Justice: Surely it is not the state policy to encourage non-residents to attend schools other than in their own district, is there?
Mr. Blomgren: --It is certainly the policy to make it available to them if they want.
For instance, it may very well be that although one is in one district, the school is closer to someone else.
In rural areas particularly, it is very important to some that they be attending schools that are closer to their own residence and not farther from their own residence.
And, there are other kinds of tuition payments available too.
If there were only 79 people who paid the tuition, you would have benefits... You would not show payments of lower than $2 million in tuition payments in 1978 alone.
My time is through.
Thank you very much.
ORAL ARGUMENT OF WILLIAM I. KAMPF ON BEHALF OF THE PETITITIONERS
Unidentified Justice: Mr. Kampf, on these statistics that have been discussed, suppose a case was before the Court with a record that showed that 60 % of all the people in the state under a statute like this were in private schools, some of which were non-denominational, non-church sponsored, and some church sponsored.
What would your view be of the statute then?
Mr. Kampf: Well, at that point, one would have to determine whether the primary effect of the statute was, indeed, to aid the religious schools.
That is not the facts before us and I believe that the question is capability of diversion and restriction or lack of it in the statute.
Unidentified Justice: Well, what about my hypothetical?
We often ask hypothetical questions just to test the argument.
Mr. Kampf: As I recall, the same question was asked in the Nyquist argument and I think the answer is less than comforting since I am not sure that that hypothetical exists.
Nevertheless, ultimately, since there is no restriction on the subsidy inherent in the statute, it runs into the same problem, which is that it is capable of diversion to religious function.
Speaking of the deductions, I should point out that the table, which is appended to the State's brief, has an analysis of the number of returns by amount of deduction appended to it and that a clear reading of that same table, as we indicated in Footnote Three of our reply brief, indicates that the greatest proportion of the dollars deducted was in the higher dollar ranges, thereby benefiting, quite obviously, tuition.
There were, as Mr. Justice Stevens indicated, a large number of returns taking small numbers of tuitions, tuition deductions.
This is quite clearly analogous to the Wolman decision where the Court sorted amongst kind of aid as in Meek and disallowed some and allowed others.
The tuition deduction itself must clearly fall because it is a benefit to the religious institutions.
It is a subsidy.
Unidentified Justice: Mr. Kampf, under the Lemon test, as I recall, the question is whether or not there is a primary effect that benefits or furthers an establishment of religion.
Would you tell us exactly what benefit an establishment of religion has experienced under this statute and then compare it with the benefit the state itself has enjoyed as a result of helping to support private schools?
Mr. Kampf: If by that, Mr. Justice Powell, you are asking for an exact analytical, statistical study, obviously that is not available.
Unidentified Justice: Does the record back you up in your claim that there was a primary effect?
Mr. Kampf: Well, the answer--
Unidentified Justice: A primary effect of furthering an establishment of religion?
Mr. Kampf: --I believe--
Unidentified Justice: Which one?
Mr. Kampf: --The fact that there has been an increase in students at religious schools while there has been a decrease in students at public schools can lead one to that conclusion.
Unidentified Justice: But, counsel... Your friend on the other side says that there has been a decrease since '56.
Mr. Kampf: But, that was before the large increase in this statute which resulted after this Court's decision in Nyquist and the subsequent decision in the Minnesota Supreme Court struck down a Nyquist kind of statute in Minnesota.
So, the comparisons are difficult to make.
Unidentified Justice: So, your answer is that the increased number of pupils in the sectarian schools?
Mr. Kampf: I think that is the only evidence we have in the record before us.
Unidentified Justice: Do you think that is a greater benefit to the religious entities than the state has experienced financially and in providing some sort of option to parents who wish to have an option?
Mr. Kampf: That question is an academic one.
It is very difficult to answer because we cannot--
Unidentified Justice: Why is it academic in this case?
Mr. Kampf: --Because we cannot determine what the Minnesota legislature would do if there was a substantial reduction.
The politics of funding of education are obviously a delicate balance of taxation and expenditure.
To say that the legislature would not simply appropriate more money were there fewer students in the parochial schools is an academic exercise that we cannot answer here today.
What we do know is that if Walz is to govern this case, then this Court's decisions in Lemon, Meek, and Wolman are rendered meaningless.
I have completed my time.
Thank you very much.
Chief Justice Burger: Thank you, gentlemen, the case is submitted.
We will hear arguments next in Boston Firefighters against NAACP.