ARIZONA CHRISTIAN SCHOOL TUITION ORGANIZATION v. WINN

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES
_________________

Nos. 09–987 and 09–991

_________________

ARIZONA CHRISTIAN SCHOOL TUITION ORGANIZA-
TION, PETITIONER
v.
KATHLEEN M. WINN ET AL.

09–987

GALE GARRIOTT, DIRECTOR, ARIZONA DEPART-
MENT OF REVENUE, PETITIONER
v.
KATHLEEN M. WINN ET AL.

09–991

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT

[April 4, 2011]

JUSTICE KENNEDY delivered the opinion of the Court.

Arizona provides tax credits for contributions to school tuition organizations, or STOs. STOs use these contribu ­ tions to provide scholarships to students attending private schools, many of which are religious. Respondents are a group of Arizona taxpayers who challenge the STO tax credit as a violation of Establishment Clause principles under the First and Fourteenth Amendments. After the Arizona Supreme Court rejected a similar Establishment Clause claim on the merits, respondents sought interven ­ tion from the Federal Judiciary.

To obtain a determination on the merits in federal court, parties seeking relief must show that they have standing under Article III of the Constitution. Standing in Estab ­ I

Respondents challenged §43–1089, a provision of the Arizona Tax Code. See 1997 Ariz. Sess. Laws §43–1087, codified, as amended, Ariz. Rev. Stat. Ann. §43–1089 (West Supp. 2010). Section 43–1089 allows Arizona tax ­ payers to obtain dollar-for-dollar tax credits of up to $500 per person and $1,000 per married couple for contribu ­ tions to STOs. §43–1089(A). If the credit exceeds an individual’s tax liability, the credit’s unused portion can be carried forward up to five years. §43–1089(D). Under a version of §43–1089 in effect during the pendency of this lawsuit, a charitable organization could be deemed an STO only upon certain conditions. See §43–1089 (West 2006). The organization was required to be exempt from federal taxation under §501(c)(3) of the Internal Revenue Code of 1986. §43–1089(G)(3) (West Supp. 2005). It could not limit its scholarships to students attending only one school. Ibid. And it had to allocate “at least ninety per cent of its annual revenue for educational scholarships or tuition grants” to children attending qualified schools. Ibid. A “qualified school,” in turn, was defined in part as a private school in Arizona that did not discriminate on the basis of race, color, handicap, familial status, or national origin. §43–1089(G)(2).

In an earlier lawsuit filed in state court, Arizona tax ­ payers challenged §43–1089, invoking both the United States Constitution and the Arizona Constitution. The Arizona Supreme Court rejected the taxpayers’ claims on the merits. Kotterman v. Killian, 193 Ariz. 273, 972 P. 2d 606 (1999). This Court denied certiorari. Rhodes v. Killian, 528 U. S. 810 (1999); Kotterman v. Killian, 528 U. S. 921 (1999).

The present action was filed in the United States Dis ­ trict Court for the District of Arizona. It named the Direc ­ tor of the Arizona Department of Revenue as defendant. The Arizona taxpayers who brought the suit claimed that §43–1089 violates the Establishment Clause of the First Amendment, as incorporated against the States by the Fourteenth Amendment. Respondents alleged that §43– 1089 allows STOs “to use State income-tax revenues to pay tuition for students at religious schools,” some of which “discriminate on the basis of religion in selecting students.” Complaint in No. 00–0287 (D Ariz.), ¶¶29–31, App. to Pet. for Cert. in No. 09–987, pp. 125a–126a. Re ­ spondents requested, among other forms of relief, an injunction against the issuance of §43–1089 tax credits for II

The concept and operation of the separation of powers in our National Government have their principal founda ­ tion in the first three Articles of the Constitution. Under Article III, the Federal Judiciary is vested with the “Power” to resolve not questions and issues but “Cases” or “Controversies.” This language restricts the federal judi ­ cial power “to the traditional role of the Anglo-American courts.” Summers v. Earth Island Institute, 555 U. S. 488, ___ (2009) (slip op., at 4). In the English legal tradition, the need to redress an injury resulting from a specific dispute taught the efficacy of judicial resolution and gave legitimacy to judicial decrees. The importance of resolving specific cases was visible, for example, in the incremental approach of the common law and in equity’s consideration of exceptional circumstances. The Framers paid heed to these lessons. See U. S. Const., Art. III, § 2 (“The judicial Power shall extend to all Cases, in Law and Equity . . . ”). By rules consistent with the longstanding practices of Anglo-American courts a plaintiff who seeks to invoke the federal judicial power must assert more than just the “generalized interest of all citizens in constitutional gov ­ ernance.” Schlesinger v. Reservists Comm. to Stop the War, 418 U. S. 208, 217 (1974).

Continued adherence to the case-or-controversy re ­ quirement of Article III maintains the public’s confidence in an unelected but restrained Federal Judiciary. If the judicial power were “extended to every question under the constitution,” Chief Justice Marshall once explained, federal courts might take possession of “almost every subject proper for legislative discussion and decision.” 4 Papers of John Marshall 95 (C. Cullen ed. 1984) (quoted in DaimlerChrysler Corp. v. Cuno, 547 U. S. 332, 341 (2006)). The legislative and executive departments of the Federal Government, no less than the judicial department, have a duty to defend the Constitution. See U. S. Const., Art. VI, cl. 3. That shared obligation is incompatible with the suggestion that federal courts might wield an “uncondi ­ tioned authority to determine the constitutionality of legislative or executive acts.” Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U. S. 464, 471 (1982). For the federal courts to decide questions of law arising outside of cases and controversies would be inimical to the Constitution’s democratic character. And the resulting conflict between the judicial and the political branches would not, “in the long run, be beneficial to either.” United States v. Richardson, 418 U. S. 166, 188–189 (1974) (Powell, J., concurring). Instructed by Chief Justice Marshall’s admo ­ nition, this Court takes care to observe the “role assigned to the judiciary” within the Constitution’s “tripartite allocation of power.” Valley Forge, supra, at 474 (internal quotation marks omitted). “First, the plaintiff must have suffered an ‘injury in fact’—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) ‘actual or imminent, not “conjectural” or “hypothetical.’ ” Sec­ ond, there must be a causal connection between the injury and the conduct complained of—the injury has to be ‘fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the inde ­ pendent action of some third party not before the court.’ Third, it must be ‘likely,’ as opposed to merely ‘speculative,’ that the injury will be ‘redressed by a fa ­ vorable decision.’ ” Id., at 560–561 (citations and foot ­ note omitted). In requiring a particular injury, the Court meant “that the injury must affect the plaintiff in a personal and individ ­ ual way.” Id., at 560, n. 1. The question now before the Court is whether respondents, the plaintiffs in the trial court, satisfy the requisite elements of standing.

A

Respondents suggest that their status as Arizona tax ­ payers provides them with standing to challenge the STO tax credit. Absent special circumstances, however, stand ­ ing cannot be based on a plaintiff’s mere status as a tax ­ payer. This Court has rejected the general proposition that an individual who has paid taxes has a “continuing, legally cognizable interest in ensuring that those funds are not used by the Government in a way that violates the Constitution.” Hein v. Freedom From Religion Foundation, Inc., 551 U. S. 587, 599 (2007) (plurality opinion). This precept has been referred to as the rule against tax ­ payer standing.

The doctrinal basis for the rule was discussed in Frothingham v. Mellon, 262 U. S. 447 (1923) (decided with Massachusetts v. Mellon). There, a taxpayer-plaintiff had alleged that certain federal expenditures were in excess of congressional authority under the Constitution. The plaintiff argued that she had standing to raise her claim because she had an interest in the Government Treasury and because the allegedly unconstitutional expenditure of Government funds would affect her personal tax liability. The Court rejected those arguments. The “effect upon future taxation, of any payment out of funds,” was too “remote, fluctuating and uncertain” to give rise to a case or controversy. Id., at 487. And the taxpayer-plaintiff’s “interest in the moneys of the Treasury,” the Court recog ­ nized, was necessarily “shared with millions of others.” Ibid. As a consequence, Frothingham held that the tax ­ payer-plaintiff had not presented a “judicial controversy” appropriate for resolution in federal court but rather a “matter of public . . . concern” that could be pursued only through the political process. Id., at 487–489.

In a second pertinent case, Doremus v. Board of Ed. of Hawthorne, 342 U. S. 429 (1952), the Court considered Frothingham’s prohibition on taxpayer standing in con ­ nection with an alleged Establishment Clause violation. A New Jersey statute had provided that public school teach ­ ers would read Bible verses to their students at the start of each schoolday. A plaintiff sought to have the law enjoined, asserting standing based on her status as a taxpayer. Writing for the Court, Justice Jackson reiter ­ ated the foundational role that Article III standing plays in our separation of powers. The plaintiff in Doremus lacked any “direct and particular financial interest” in the suit, and, as a result, a decision on the merits would have been merely “advisory.” 342 U. S., at 434–435. It followed that the plaintiff’s allega ­ tions did not give rise to a case or controversy subject to judicial resolution under Article III. Ibid. Cf. School Dist. of Abington Township v. Schempp, 374 U. S., at 224, n. 9 (finding standing where state laws required Bible readings or prayer in public schools, not because plaintiffs were state taxpayers but because their children were enrolled in public schools and so were “directly affected” by the challenged laws).

In holdings consistent with Frothingham and Doremus, more recent decisions have explained that claims of tax ­ payer standing rest on unjustifiable economic and political speculation. When a government expends resources or declines to impose a tax, its budget does not necessarily suffer. On the contrary, the purpose of many governmen ­ tal expenditures and tax benefits is “to spur economic activity, which in turn increases government revenues.” DaimlerChrysler, 547 U. S., at 344.

Difficulties persist even if one assumes that an expendi ­ ture or tax benefit depletes the government’s coffers. To find injury, a court must speculate “that elected officials will increase a taxpayer-plaintiff’s tax bill to make up a deficit.” Ibid. And to find redressability, a court must assume that, were the remedy the taxpayers seek to be allowed, “legislators will pass along the supposed in ­ creased revenue in the form of tax reductions.” Ibid. It would be “pure speculation” to conclude that an injunction against a government expenditure or tax benefit “would result in any actual tax relief” for a taxpayer-plaintiff. ASARCO Inc. v. Kadish, 490 U. S. 605, 614 (1989) (opinion of KENNEDY, J.).

These well-established principles apply to the present cases. Respondents may be right that Arizona’s STO tax credits have an estimated annual value of over $50 mil ­ lion. See Brief for Respondent Winn et al. 42; see also Arizona Dept. of Revenue, Revenue Impact of Arizona’s Tax Expenditures FY 2009/10, p. 48 (preliminary Nov. 15, 2010) (reporting the total estimated “value” of STO tax credits claimed over a 1-year period). The education of its young people is, of course, one of the State’s principal missions and responsibilities; and the consequent costs will make up a significant portion of the state budget. That, however, is just the beginning of the analysis.

By helping students obtain scholarships to private schools, both religious and secular, the STO program might relieve the burden placed on Arizona’s public schools. The result could be an immediate and permanent cost savings for the State. See Brief for Petitioner Arizona Christian School Tuition Organization 31 (discussing studies indicating that the STO program may on net save the State money); see also Mueller v. Allen, 463 U. S. 388, 395 (1983) (“By educating a substantial number of stu ­ dents [private] schools relieve public schools of a corre ­ spondingly great burden—to the benefit of all taxpayers”). Underscoring the potential financial benefits of the STO program, the average value of an STO scholarship may be far less than the average cost of educating an Arizona public school student. See Brief for Petitioner Garriott 38. Because it encourages scholarships for attendance at private schools, the STO tax credit may not cause the B

The primary contention of respondents, of course, is that, despite the general rule that taxpayers lack standing to object to expenditures alleged to be unconstitutional, their suit falls within the exception established by Flast v. Cohen, 392 U. S. 83. It must be noted at the outset that, as this Court has explained, Flast’s holding provides a “narrow exception” to “the general rule against taxpayer standing.” Bowen v. Kendrick, 487 U. S. 589, 618 (1988).

At issue in Flast was the standing of federal taxpayers to object, on First Amendment grounds, to a congressional statute that allowed expenditures of federal funds from the General Treasury to support, among other programs, “instruction in reading, arithmetic, and other subjects in religious schools, and to purchase textbooks and other instructional materials for use in such schools.” 392 U. S., at 85–86. Flast held that taxpayers have standing when two conditions are met.

The first condition is that there must be a “logical link” between the plaintiff’s taxpayer status “and the type of legislative enactment attacked.” Id., at 102. This condi ­ tion was not satisfied in Doremus because the statute challenged in that case—providing for the recitation of Bible passages in public schools—involved at most an “incidental expenditure of tax funds.” Flast, 392 U. S., at 102. In Flast, by contrast, the allegation was that the Federal Government violated the Establishment Clause in the exercise of its legislative authority both to collect and spend tax dollars. Id., at 103. In the decades since Flast, the Court has been careful to enforce this requirement. See Hein, 551 U. S. 587 (no standing under Flast to chal ­ lenge federal executive actions funded by general appro ­ priations); Valley Forge, 454 U. S. 464 (no standing under Flast to challenge an agency’s decision to transfer a parcel of federal property pursuant to the Property Clause).

The second condition for standing under Flast is that there must be “a nexus” between the plaintiff’s taxpayer status and “the precise nature of the constitutional in ­ fringement alleged.” 392 U. S., at 102. This condition was deemed satisfied in Flast based on the allegation that Government funds had been spent on an outlay for relig ­ ion in contravention of the Establishment Clause. Id., at 85–86. In Frothingham, by contrast, the claim was that Religion, reprinted in Everson v. Board of Ed. of Ewing, 330 U. S. 1, 74 (1947) (supplemental appendix to dissent of Rutledge, J.). Under the proposed assessment bill, tax ­ payers would direct their payments to Christian societies of their choosing. Ibid. If a taxpayer made no such choice, the General Assembly was to divert his funds to “seminar ­ ies of learning,” at least some of which “undoubtedly would have been religious in character.” Rosenberger v. Rector and Visitors of Univ. of Va., 515 U. S. 819, 869, n. 1 (1995) (Souter, J., dissenting) (internal quotation marks omitted); see also id., at 853, n. 1 (THOMAS, J., concurring). How ­ ever the “seminaries” provision might have functioned in practice, critics took the position that the proposed bill threatened compulsory religious contributions. See, e.g., T. Buckley, Church and State in Revolutionary Virginia, 1776–1787, pp. 133–134 (1977); H. Eckenrode, Separation of Church and State in Virginia 106–108 (1910).

In the Memorial and Remonstrance, Madison objected to the proposed assessment on the ground that it would coerce a form of religious devotion in violation of con­ science. In Madison’s view, government should not “ ‘force a citizen to contribute three pence only of his property for the support of any one establishment.’ ” Flast, supra, at 103 (quoting 2 Writings of James Madison 183, 186 (G. Hunt ed. 1901)). This Madisonian prohibition does not depend on the amount of property conscripted for sectar ­ ian ends. Any such taking, even one amounting to “three pence only,” violates conscience. 392 U. S., at 103; cf. supra, at 6–7. The proposed bill ultimately died in com­ mittee; and the General Assembly instead enacted legisla ­ tion forbidding “compelled” support of religion. See A Bill for Establishing Religious Freedom, reprinted in 2 Papers of Thomas Jefferson 545–546 (J. Boyd ed. 1950); see also Flast, 392 U. S., at 104, n. 24. Madison himself went on to become, as Flast put it, “the leading architect of the relig ­ ion clauses of the First Amendment.” Id., at 103. Flast tax credits refutes respondents’ assertion of standing. When Arizona taxpayers choose to contribute to STOs, they spend their own money, not money the State has collected from respondents or from other taxpayers. Ari ­ zona’s §43–1089 does not “extrac[t] and spen[d]” a consci ­ entious dissenter’s funds in service of an establishment, Flast, 392 U. S., at 106, or “ ‘force a citizen to contribute three pence only of his property’ ” to a sectarian organiza ­ tion, id., at 103 (quoting 2 Writings of James Madison, supra, at 186). On the contrary, respondents and other Arizona taxpayers remain free to pay their own tax bills, without contributing to an STO. Respondents are likewise able to contribute to an STO of their choice, either reli ­ gious or secular. And respondents also have the option of contributing to other charitable organizations, in which case respondents may become eligible for a tax deduction or a different tax credit. See, e.g., Ariz. Rev. Stat. Ann. §43–1088 (West Supp. 2010). The STO tax credit is not tantamount to a religious tax or to a tithe and does not visit the injury identified in Flast. It follows that respon ­ dents have neither alleged an injury for standing purposes under general rules nor met the Flast exception. Finding standing under these circumstances would be more than the extension of Flast “to the limits of its logic.” Hein, 551 U. S., at 615 (plurality opinion). It would be a departure from Flast’s stated rationale.

Furthermore, respondents cannot satisfy the require ­ ments of causation and redressability. When the govern ­ ment collects and spends taxpayer money, governmental choices are responsible for the transfer of wealth. In that case a resulting subsidy of religious activity is, for pur ­ poses of Flast, traceable to the government’s expenditures. And an injunction against those expenditures would ad­ dress the objections of conscience raised by taxpayer­ plaintiffs. See DaimlerChrysler, 547 U. S., at 344. Here, by contrast, contributions result from the decisions of equated with the Arizona State Treasury.

The conclusion that the Flast exception is inapplicable at first may seem in tension with several earlier cases, all addressing Establishment Clause issues and all decided after Flast. See Mueller, 463 U. S. 388; Nyquist v. Mauclet, 432 U. S. 1 (1977); Hunt v. McNair, 413 U. S. 734 (1973); Walz v. Tax Comm’n of City of New York, 397 U. S. 664 (1970); cf. Hibbs v. Winn, 542 U. S. 88 (reaching only threshold jurisdictional issues). But those cases do not mention standing and so are not contrary to the conclusion reached here. When a potential jurisdictional defect is neither noted nor discussed in a federal decision, the decision does not stand for the proposition that no defect existed. See, e.g., Hagans v. Lavine, 415 U. S. 528, 535, n. 5 (1974) (“[W]hen questions of jurisdiction have been passed on in prior decisions sub silentio, this Court has never considered itself bound when a subsequent case finally brings the jurisdictional issue before us”); United States v. L. A. Tucker Truck Lines, Inc., 344 U. S. 33, 38 (1952) (“Even as to our own judicial power of jurisdiction, this Court has followed the lead of Mr. Chief Justice Mar ­ shall who held that this Court is not bound by a prior exercise of jurisdiction in a case where it was not ques ­ tioned and it was passed sub silentio”). The Court would risk error if it relied on assumptions that have gone un­ stated and unexamined.

Furthermore, if a law or practice, including a tax credit, disadvantages a particular religious group or a particular nonreligious group, the disadvantaged party would not have to rely on Flast to obtain redress for a resulting injury. See Texas Monthly, Inc. v. Bullock, 489 U. S., at 8 (plurality opinion) (finding standing where a general interest magazine sought to recover tax payments on the ground that religious periodicals were exempt from the tax). Because standing in Establishment Clause cases can be shown in various ways, it is far from clear that any * * *

Few exercises of the judicial power are more likely to undermine public confidence in the neutrality and integ ­ rity of the Judiciary than one which casts the Court in the role of a Council of Revision, conferring on itself the power to invalidate laws at the behest of anyone who disagrees with them. In an era of frequent litigation, class actions, sweeping injunctions with prospective effect, and continu ­ ing jurisdiction to enforce judicial remedies, courts must be more careful to insist on the formal rules of standing, not less so. Making the Article III standing inquiry all the more necessary are the significant implications of consti ­ tutional litigation, which can result in rules of wide appli ­ cability that are beyond Congress’ power to change.

The present suit serves as an illustration of these prin ­ ciples. The fact that respondents are state taxpayers does not give them standing to challenge the subsidies that §43–1089 allegedly provides to religious STOs. To alter the rules of standing or weaken their requisite elements would be inconsistent with the case-or-controversy limita ­ tion on federal jurisdiction imposed by Article III.

The judgment of the Court of Appeals is reversed. It is so ordered.

SCALIA, J., concurring

SUPREME COURT OF THE UNITED STATES
_________________

Nos. 09–987 and 09–991

_________________

ARIZONA CHRISTIAN SCHOOL TUITION ORGANIZA-
TION, PETITIONER
v.
KATHLEEN M. WINN ET AL.

09–987

GALE GARRIOTT, DIRECTOR, ARIZONA DEPART-
MENT OF REVENUE, PETITIONER
v.
KATHLEEN M. WINN ET AL.

09–991

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT

[April 4, 2011]

JUSTICE SCALIA, with whom JUSTICE THOMAS joins, concurring.

Taxpayers ordinarily do not have standing to challenge federal or state expenditures that allegedly violate the Constitution. See DaimlerChrysler Corp. v. Cuno, 547 U. S. 332, 343–345 (2006). In Flast v. Cohen, 392 U. S. 83 (1968), we created a narrow exception for taxpayers raising Establishment Clause challenges to government expenditures. Today’s majority and dissent struggle with whether respondents’ challenge to the Arizona tuition tax credit falls within that narrow exception. Under a principled reading of Article III, their struggles are unnecessary. Flast is an anomaly in our jurisprudence, irreconcilable with the Article III restrictions on federal judicial power that our opinions have established. I would repudiate that misguided decision and enforce the Constitution. See Hein v. Freedom From Religion Foundation, Inc., 551 U. S.

KAGAN, J., dissenting

SUPREME COURT OF THE UNITED STATES
_________________

Nos. 09–987 and 09–991

_________________

ARIZONA CHRISTIAN SCHOOL TUITION ORGANIZA-
TION, PETITIONER
v.
KATHLEEN M. WINN ET AL.

09–987

GALE GARRIOTT, DIRECTOR, ARIZONA DEPART-
MENT OF REVENUE, PETITIONER
v.
KATHLEEN M. WINN ET AL.

09–991

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT

[April 4, 2011]

JUSTICE KAGAN, with whom JUSTICE GINSBURG, JUSTICE BREYER, and JUSTICE SOTOMAYOR join, dissenting.

Since its inception, the Arizona private-school-tuition tax credit has cost the State, by its own estimate, nearly $350 million in diverted tax revenue. The Arizona taxpayers who instituted this suit (collectively, Plaintiffs) allege that the use of these funds to subsidize school tuition organizations (STOs) breaches the Establishment Clause’s promise of religious neutrality. Many of these STOs, the Plaintiffs claim, discriminate on the basis of a child’s religion when awarding scholarships.

For almost half a century, litigants like the Plaintiffs have obtained judicial review of claims that the government has used its taxing and spending power in violation of the Establishment Clause. Beginning in Flast v. Cohen, 392 U. S. 83 (1968), and continuing in case after case for challenges to state funding of religion.

And that result—the effective demise of taxpayer standing—will diminish the Establishment Clause’s force and meaning. Sometimes, no one other than taxpayers has suffered the injury necessary to challenge government sponsorship of religion. Today’s holding therefore will prevent federal courts from determining whether some subsidies to sectarian organizations comport with our Constitution’s guarantee of religious neutrality. Because I believe these challenges warrant consideration on the merits, I respectfully dissent from the Court’s decision.

I

As the majority recounts, this Court has held that paying taxes usually does not give an individual Article III standing to challenge government action. Ante, at 6–10. Taxpayers cannot demonstrate the requisite injury because each person’s “interest in the moneys of the Treasury . . . is comparatively minute and indeterminable.” Frothingham v. Mellon, 262 U. S. 447, 487 (1923) (decided with Massachusetts v. Mellon). Given the size and complexity of government budgets, it is a “fiction” to contend that an unlawful expenditure causes an individual “any measurable economic harm.” Hein v. Freedom From Religion Foundation, Inc., 551 U. S. 587, 593 (2007) (plurality opinion). Nor can taxpayers in the ordinary case establish causation (i.e., that the disputed government measure affects their tax burden) or redressability (i.e., that a judicial remedy would result in tax reductions). Ante, at 8–9. On these points, all agree.

The disagreement concerns their relevance here. This case is not about the general prohibition on taxpayer standing, and cannot be resolved on that basis. This case is instead about the exception to the rule—the principle established decades ago in Flast that taxpayers may challenge certain government actions alleged to violate the claim sought to be adjudicated,” ibid., could not be any tighter: As noted when this Court previously addressed a different issue in this lawsuit, the Plaintiffs invoke the Establishment Clause to challenge “an integral part of the State’s tax statute” that “is reflected on state tax forms” and that “is part of the calculus necessary to determine tax liability.” Hibbs v. Winn, 542 U. S. 88, 119 (2004) (Winn I) (KENNEDY, J., dissenting) (emphasis added). Finding standing here is merely a matter of applying Flast. I would therefore affirm the Court of Appeals’ determination (not questioned even by the eight judges who called for rehearing en banc on the merits) that the Plaintiffs can pursue their claim in federal court.

II

The majority reaches a contrary decision by distinguishing between two methods of financing religion: A taxpayer has standing to challenge state subsidies to religion, the Court announces, when the mechanism used is an appropriation, but not when the mechanism is a targeted tax break, otherwise called a “tax expenditure.”1 In the former case, but not in the latter, the Court declares, the taxpayer suffers cognizable injury. Ante, at 14–15. A

Until today, this Court has never so much as hinted that litigants in the same shoes as the Plaintiffs lack standing under Flast. To the contrary: We have faced the identical situation five times—including in a prior incarnation of this very case!—and we have five times resolved the suit without questioning the plaintiffs’ standing. Lower federal courts have followed our example and handled the matter in the same way. I count 14 separate cases (involving 20 appellate and district courts) that adjudicated taxpayer challenges to tax expenditures alleged to violate the Establishment Clause.2 I suspect I have missed a few. I have not found any instance of a court dismissing such a claim for lack of standing.

Consider the five cases in which this Court entertained suits filed by taxpayers alleging that tax expenditures unlawfully subsidized religion. We first took up such a challenge in Walz v. Tax Comm’n of City of New York, 397 U. S. 664, 666–667 (1970), where we upheld the constitutionality of a property tax exemption for religious organizations. Next, in Hunt v. McNair, 413 U. S. 734, 735–736, 738–739 (1973), we decided that the Establishment Clause permitted a state agency to issue tax-exempt bonds to sectarian institutions. The same day, in Committee for Public Ed. & Religious Liberty v. Nyquist, 413 U. S. 756, 789–794 (1973), we struck down a state tax deduction for parents who paid tuition at religious and other private schools. A decade later, in Mueller v. Allen, 463 U. S. 388, 390–391 (1983), we considered, but this time rejected, a similar Establishment Clause challenge to a state tax deduction for expenses incurred in attending such schools. And most recently, we decided a preliminary issue in this “[The Court:] So if you are right, . . . the Court was without authority to decide Walz, Nyquist, Hunt, Mueller, [and] Hibbs [v. Winn,] this very case, just a few years ago? . . . . [Solicitor General:] Right. . . . [M]y answer to you is yes. [The Court:] I just want to make sure I heard your answer to the—you said the answer is yes. In other words, you agree . . . those cases were wrongly decided. . . . [Y]ou would have said there would have been no standing in those cases. [Solicitor General:] Oral Arg. 10–12. No taxpayer standing.” Tr. of Nor could the Solicitor General have answered differently. Each of these suits, as described above, alleged that a state tax expenditure violated the Establishment Clause. And each relied only on taxpayer standing as the basis for federal-court review.4 The Court today speculates that “the plaintiffs in those cases could have advanced arguments for jurisdiction independent of Flast.” Ante, at 18. But whatever could have been, in fact not one of them did so.

And the Court itself understood the basis of standing in these five cases. This and every federal court has an independent obligation to consider standing, even when the parties do not call it into question. See, e.g., FW/PBS, Inc. v. Dallas, 493 U. S. 215, 230–231 (1990). To do anything else would risk an unlawful exercise of judicial authority. And in these cases the Court had an additional prompt: In several of them, amici, including the United States, contested—or at least raised as a question—the plaintiffs’ standing as taxpayers to pursue their claims.5 The Court, moreover, was well aware at the time of the issues presented by taxpayer standing. We decided three of the cases within a year of elaborating the general bar on conclude that taxpayers had standing to challenge a program of aid to religious and other private schools. 473 U. S., at 380, n. 5, overruled in part on other grounds by Agostini v. Felton, 521 U. S. 203 (1997). And in Winn I (recall, an earlier iteration of this case), we rejected a different jurisdictional objection in part by relying on Mueller and Nyquist. We called those cases “adjudications of great moment discerning no [jurisdictional] barrier” and warned that they could not “be written off as reflecting nothing more than unexamined custom or unthinking habit.” 542 U. S., at 112, n. 13 (internal quotation marks and citations omitted). Until today, that is—when the majority does write off these adjudications and reaches a result against all precedent.

B

Our taxpayer standing cases have declined to distinguish between appropriations and tax expenditures for a simple reason: Here, as in many contexts, the distinction is one in search of a difference. To begin to see why, consider an example far afield from Flast and, indeed, from religion. Imagine that the Federal Government decides it should pay hundreds of billions of dollars to insolvent banks in the midst of a financial crisis. Suppose, too, that many millions of taxpayers oppose this bailout on the ground (whether right or wrong is immaterial) that it uses their hard-earned money to reward irresponsible business behavior. In the face of this hostility, some Members of Congress make the following proposal: Rather than give the money to banks via appropriations, the Government will allow banks to subtract the exact same amount from the tax bill they would otherwise have to pay to the U. S. Treasury. Would this proposal calm the furor? Or would most taxpayers respond by saying that a subsidy is a subsidy (or a bailout is a bailout), whether accomplished by the one means or by the other? Surely the latter; inFor just this reason, government budgeting rules routinely insist on calculation of tax subsidies, in addition to appropriations. The President must provide information on the estimated cost of tax expenditures in the budget he submits to Congress each year. See 31 U. S. C. §1105(a)(16); n. 1, supra. Similarly, congressional budget committees must report to all Members on the level of tax expenditures in the federal budget. See 2 U. S. C. §632(e)(2)(E). Many States—including Arizona—likewise compute the impact of targeted tax breaks on the public treasury, in recognition that these measures are just spending under a different name, see n. 1, supra. The Arizona Department of Revenue must issue an annual report “detailing the approximate costs in lost revenue for all state tax expenditures.” Ariz. Rev. Stat. Ann. §42– 1005(A)(4) (West 2006). The most recent report notes the significance of this accounting in the budget process. It explains that “the fiscal impact of implementing” targeted tax breaks, including the STO credit challenged here, is “similar to a direct expenditure of state funds.” Arizona Dept. of Revenue, Revenue Impact of Arizona’s Tax Expenditures FY 2009/10, p. 1 (preliminary Nov. 15, 2010); see also Surrey, Tax Incentives as a Device for Implementing Government Policy: A Comparison with Direct Government Expenditures, 83 Harv. L. Rev. 705, 717 (1970) (“A dollar is a dollar—both for the person who receives it and the government that pays it, whether the dollar comes with a tax credit label or a direct expenditure label”).

And because these financing mechanisms result in the same bottom line, taxpayers challenging them can allege the same harm. Our prior cases have often recognized the cost that targeted tax breaks impose on taxpayers generally. “When the Government grants exemptions or allows deductions” to some, we have observed, “all taxpayers are affected; the very fact of the exemption or deduction . . . means that other taxpayers can be said to be indirect and fisc and on those who contribute to it. Regardless of which mechanism the State uses, taxpayers have an identical stake in ensuring that the State’s exercise of its taxing and spending power complies with the Constitution.7

Here, the mechanism Arizona has selected is a dollarfor-dollar tax credit to aid school tuition organizations. Each year come April 15, the State tells Arizonans: Either pay the full amount of your tax liability to the State, or subtract up to $500 from your tax bill by contributing that sum to an STO. See Winn I, 542 U. S., at 95. To claim the credit, an individual makes a notation on her tax return and splits her tax payment into two checks, one made out to the State and the other to the STO. As this Court recognized in Winn I, the STO payment is therefore “costless” to the individual, ibid.; it comes out of what she otherwise would be legally obligated to pay the State— hence, out of public resources. And STOs capitalize on this aspect of the tax credit for all it is worth—which is quite a lot. To drum up support, STOs highlight that “donations” are made not with an individual’s own, but with other people’s—i.e., taxpayers’—money. One STO advertises that “[w]ith Arizona’s scholarship tax credit, you can send children to our community’s [religious] day schools and it won’t cost you a dime!” Brief for Respondents 13 (internal quotation marks and emphasis omitted). Another urges potential donors to “imagine giving [to charity] with someone else’s money. . . . Stop Imagining, C

The majority offers just one reason to distinguish appropriations and tax expenditures: A taxpayer experiences injury, the Court asserts, only when the government “extracts and spends” her very own tax dollars to aid religion. Ante, at 15 (internal quotation marks and alterations omitted). In other words, a taxpayer suffers legally cognizable harm if but only if her particular tax dollars wind up in a religious organization’s coffers. See also Tr. of Oral Arg. 4 (Solicitor General proposing that the “key point” was: “If you placed an electronic tag to track and monitor each cent that the [Plaintiffs] pay in tax,” none goes to religious STOs). And no taxpayer can make this showing, the Court concludes, if the government subsidizes religion through tax credits, deductions, or exemptions (rather than through appropriations).9

The majority purports to rely on Flast to support this new “extraction” requirement. It plucks the three words “extrac[t] and spen[d]” from the midst of the Flast opinion, and suggests that they severely constrict the decision’s scope. Ante, at 15 (quoting 392 U. S., at 106). And it notes that Flast partly relied on James Madison’s famed argument in the Memorial and Remonstrance Against Religious Assessments: “ ‘[T]he same authority which can force a citizen to contribute three pence only of his property for whenever the legislature used its taxing-and-spending power to channel tax dollars to religious activities. In that and subsequent cases (including the five in this Court involving tax expenditures), a taxpayer pleaded the requisite harm by stating that public resources were funding religion; the tracing of particular dollars (whether by the Solicitor General’s “electronic tag” or other means) did not enter into the question. See DaimlerChrysler Corp., 547 U. S., at 348 (describing how the Flast Court’s understanding of the Establishment Clause’s history led the Court to view the alleged “injury” as the expenditure of “ ‘tax money’ in aid of religion” (quoting Flast, 392 U. S., at 106)). And for all the reasons already given, that standard is met regardless whether the funding is provided via cash grant or tax expenditure. See supra, at 11–16. Taxpayers pick up the cost of the subsidy in either form. See ibid. So taxpayers have an interest in preventing the use of either mechanism to infringe religious neutrality.10 used, after all, would not have been “extracted from a citizen and handed to a religious institution in violation of the citizen’s conscience.” Ante, at 16. But this Court has never indicated that States may insulate subsidies to religious organizations from legal challenge by eliciting the consent of some taxpayers. And the Court has of course been right not to take this approach. Taxpayers incur the same harm, and should have the same ability to bring suit, whether the government stores tax funds in one bank account or two. None of the principles underlying the Establishment Clause suggests otherwise.

James Madison, whom the Court again rightly labels “the leading architect of the religion clauses,” ante, at 13 (quoting Flast, 392 U. S., at 103; internal quotation marks omitted), had something important to say about the matter of “extraction.” As the majority notes, Madison’s Memorial and Remonstrance criticized a tax levy proposed in Virginia to aid teachers of the Christian religion. Ante, at 12–13. But Madison’s passionate opposition to that proposal informs this case in a manner different than the majority suggests. The Virginia tax in fact would not have extracted any monies (not even “three pence”) from unwilling citizens, as the Court now requires. The plan allowed conscientious objectors to opt out of subsidizing religion by contributing their assessment to an alternative fund for the construction and maintenance of county schools.11 See In this respect, the Virginia Assessment is just like the Arizona tax credit. Although both funnel tax funds to religious organizations (and so saddle all taxpayers with the cost), neither forces any given taxpayer to pay for the subsidy out of her pocket. Madison thought that feature of the Assessment insufficient to save it. By relying on the selfsame aspect of the Arizona scheme to deny the Plaintiffs’ claim of injury, the majority betrays Madison’s vision.

III

Today’s decision devastates taxpayer standing in Establishment Clause cases. The government, after all, often uses tax expenditures to subsidize favored persons and activities. Still more, the government almost always has this option. Appropriations and tax subsidies are readily interchangeable; what is a cash grant today can be a tax break tomorrow. The Court’s opinion thus offers a roadmap—more truly, just a one-step instruction—to any government that wishes to insulate its financing of religious activity from legal challenge. Structure the funding as a tax expenditure, and Flast will not stand in the way. No taxpayer will have standing to object. However blatantly the government may violate the Establishment Clause, taxpayers cannot gain access to the federal courts.

And by ravaging Flast in this way, today’s decision damages one of this Nation’s defining constitutional commitments. “Congress shall make no law respecting an establishment of religion”—ten simple words that have stood for over 200 years as a foundation stone of American religious liberty. Ten words that this Court has long understood, as James Madison did, to limit (though by no

1 “Tax expenditures” are monetary subsidies the government bestows on particular individuals or organizations by granting them preferential tax treatment. The co-chairmen of the National Commission on Fiscal Responsibility and Reform recently referred to these tax breaks as “the various deductions, credits and loopholes that are just spending by another name.” Washington Post, Feb. 20, 2011, p. A19, col. 3; see also 2 U. S. C. §622(3) (defining “tax expenditures,” for purposes of the Federal Government’s budgetary process, as “those revenue losses attributable to provisions of the . . . tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability”); S. Surrey & P. McDaniel, Tax Expenditures 3 (1985) (explaining that tax expenditures “represent government spending for favored activities or groups, effected through the tax system rather than through direct grants, loans, or other forms of government assistance”).

2 See Johnson v. Economic Development Corporation of Cty. of Oakland, 241 F. 3d 501 (CA6 2001), aff’g 64 F. Supp. 2d 657 (ED Mich. 1999); Steele v. Industrial Development Bd. of Metropolitan Govt. Nashville, 301 F. 3d 401 (CA6 2002), rev’g 117 F. Supp. 2d 693 (MD Tenn. 2000); Christie v. United States, 31 Fed. Appx. 571 (CA9 2002), aff’g No. 00–cv–02392– J (SD Cal., Apr. 23, 2001); Mueller v. Allen, 676 F. 2d 1195 (CA8 1982), aff’g 514 F. Supp. 998 (Minn. 1981); Rhode Island Federation of Teachers, AFL–CIO v. Norberg, 630 F. 2d 855 (CA1 1980), aff’g 479 F. Supp. 1364 (RI 1979); Public Funds for Public Schools of N. J. v. Byrne, 590 F. 2d 514 (CA3 1979), aff’g 444 F. Supp. 1228 (NJ 1978); Freedom from Religion Foundation, Inc. v. Geithner, 715 F. Supp. 2d 1051 (ED Cal. 2010); Gillam v. Harding Univ., No. 4:08–CV–00363BSM, 2009 WL 1795303,*1 (ED Ark., June 24, 2009); Leverett v. United States Bur. of HHS, No. Civ. A. 99–S–1670, 2003 WL 21770810,*1 (D Colo., June 9, 2003); Luthens v. Bair, 788 F. Supp. 1032 (SD Iowa 1992); Minnesota Civ. Liberties Union v. Roemer, 452 F. Supp. 1316 (Minn. 1978); Kosydar v. Wolman, 353 F. Supp. 744 (SD Ohio 1972) (per curiam) (three-judge court); Committee for Public Ed. & Religious Liberty v. Nyquist, 350 F. Supp. 655 (SDNY 1972) (threejudge court); United Ams. for Public Schools v. Franchise Tax Bd. of Cal., No. C–73–0090 (ND Cal., Feb. 1, 1974) (three-judge court), reprinted in App. to Juris. Statement in Franchise Tax Bd. of Cal. v. United Ams. for Public Schools, O. T. 1973, No. 73–1718, pp. 1–4.

3 We have also several times summarily affirmed lower court decisions adjudicating taxpayer challenges to tax expenditures alleged to violate the Establishment Clause. See Byrne v. Public Funds for Public Schools of N. J., 442 U. S. 907 (1979), summarily aff’g 590 F. 2d 514, 516, n. 3 (CA3) (holding that “plaintiffs, as taxpayers, have standing under Flast” to challenge a tax deduction for dependents attending religious and other private schools); Grit v. Wolman, 413 U. S. 901 (1973), summarily aff’g Kosydar v. Wolman, 353 F. Supp. 744, 749 (SD Ohio 1972) (three-judge court) (noting that no party had questioned the standing of taxpayers to contest tax credits for private-school tuition payments); Franchise Tax Bd. of Cal. v. United Ams. for Public Schools, 419 U. S. 890 (1974), summarily aff’g No. C–73–0090 (ND Cal., Feb. 1, 1974) (three-judge court) (invalidating a tax credit for children attending private schools).

4 See App. in Hibbs v. Winn, O. T. 2003, No. 02–1809, pp. 7–8 (complaint); Pet. for Cert. in Mueller v. Allen, O. T. 1982, No. 82–195, p. 7; App. in Committee for Public Ed. & Religious Liberty v. Nyquist, O. T. 1972, No. 72–694, p. 9a (complaint); App. in Hunt v. McNair, O. T. 1972, No. 71–1523, p. 5 (complaint); App. in Walz v. Tax Comm’n of City of New York, O. T. 1969, No. 135, pp. 5–7 (complaint).

5 See, e.g., Brief for United States as Amicus Curiae in Mueller v. Allen, supra, at 12, n. 15; Brief for United States as Amicus Curiae in Hibbs v. Winn, supra, at 3, n. 1; Brief for Honorable Trent Franks et al. as Amici Curiae in Hibbs v. Winn, supra, at 6, n. 2; Brief for United States Catholic Conference as Amicus Curiae in Walz v. Tax Comm’n of City of New York, supra, at 23–24.

6 The majority observes that special tax benefits may in fact “increas[e] government revenues” by “spur[ring] economic activity.” Ante, at 8 (internal quotation marks omitted). That may be so in the long run (although the only non-speculative effect is to immediately diminish funds in the public treasury). But as the majority acknowledges, ibid., this possibility holds just as true for appropriations; that is why we (optimistically) refer to some government outlays as “investments.” The insight therefore cannot help the majority distinguish between tax expenditures and appropriations.

7 The majority indicates that some persons could challenge these hypothetical government actions based on individualized injury, separate and apart from taxpayer status. See ante, at 1–2, 17–18. That is quite right; indeed, some parents or children likely have standing to challenge the Arizona tax credit on such grounds. But this possibility does not detract from the point made here. The purpose of these illustrations is to show that if taxpayer status is the thing alleged to confer standing, it should do so irrespective of the form of the government subsidy.

8 See Arizona Dept. of Revenue, Revenue Impact of Arizona’s Tax Expenditures FY 2009/10, p. 48 (preliminary Nov. 15, 2010); FY 2008/09, p. 54 (preliminary Nov. 16, 2009); FY 2007/08, p. 58 (preliminary Nov. 17, 2008); FY 2006/07, p. 65 (preliminary Nov. 15, 2007/final Sept. 2010); FY 2005/06, p. 73 (preliminary Nov. 15, 2006/final Dec. 2009); FY 2004/05, p. 72 (preliminary Nov. 15, 2005/final June 2009); FY 2003/04, p. 74 (preliminary Nov. 14, 2004/final Feb. 2007); FY 2002/03, p. 74 (preliminary Nov. 15, 2003/final Mar. 2007); FY 2001/02, p. 71 (preliminary Nov. 15, 2002/final Mar. 2004); FY 2000/01, p. 73 (preliminary Nov. 15, 2001/final July 2003); FY 1999/00, p. 72 (preliminary Nov. 15, 2000/final Aug. 2002).

9 Even taken on its own terms, the majority’s reasoning does not justify the conclusion that the Plaintiffs lack standing. Arizona’s tuitiontax-credit program in fact necessitates the direct expenditure of funds from the state treasury. After all, the statute establishing the initiative requires the Arizona Department of Revenue to certify STOs, maintain an STO registry, make the registry available to the public on request and post it on a website, collect annual reports filed by STOs, and send written notice to STOs that have failed to comply with statutory requirements. Ariz. Rev. Stat. Ann. §§43–1502(A)–(C), 43–1506 (West Supp. 2010). Presumably all these activities cost money, which comes from the state treasury. Thus, on the majority’s own theory, the government has “extract[ed] and spen[t]” the Plaintiffs’ (along with other taxpayers’) dollars to implement the challenged program, and the Plaintiffs should have standing. (The majority, after all, makes clear that nothing in its analysis hinges on the size or proportion of the Plaintiffs’ contribution. Ante, at 13.) But applying the majority’s theory in this way reveals the hollowness at its core. Can anyone believe that the Plaintiffs have suffered injury through the costs involved in administering the program, but not through the far greater costs of granting the tax expenditure in the first place?

10 On this traditional view of the harm to taxpayers arising from state financing of religion, the Plaintiffs here can satisfy not only Article III’s injury requirement, but also its causation and redressability requirements. The majority’s contrary position, ante, at 15–16, stems from its miscasting of the injury involved; once that harm is stated correctly, all the rest follows. To wit: The Plaintiffs allege they suffer injury when the State funnels public resources to religious organizations through the tax credit. Arizona, they claim, has caused this injury by enacting legislation that establishes the credit. And an injunction limiting the credit’s operation would redress the harm by preventing the allegedly unlawful diversion of tax revenues. The Plaintiffs need not, as the majority insists, show that this remedy would “affect . . . their tax payments,” ante, at 16, any more than the taxpayer in Flast had to establish that her tax burden would decrease absent the Government’s funding of religious schools. As we have previously recognized, when taxpayers object to the spending of tax money in violation of the Establishment Clause (whether through tax credits or appropriations), “an injunction against the spending would . . . redress [their] injury, regardless of whether lawmakers would dispose of the savings in a way that would benefit the taxpayer-plaintiffs personally.” DaimlerChrysler Corp. v. Cuno, 547 U. S. 332, 348–349 (2006).

11 The opt-out provision described county schools as “seminaries of learning.” A Bill for Establishing A Provision for Teachers of the Christian Religion, reprinted in Everson v. Board of Ed. of Ewing, 330 U. S. 1, 74 (1947) (supplemental appendix to dissent of Rutledge, J.). In 1785, that phrase had no particular religious connotation: It “meant schools for general education, not schools for the training of ministers.” Berg & Laycock, Mistakes in Locke v. Davey and the Future of State Payments for Services Provided by Religious Institutions, 40 Tulsa L. Rev. 227, 244, n. 113 (2004); see also, e.g., 2 S. Johnson, Dictionary of the English Language 1741 (1773) (“seminary” means “place of education, from whence scholars are transplanted into life”).

12 The majority speculates that the Virginia General Assembly would have given some of the monies collected from conscientious objectors to schools with a sectarian bent. Ante, at 13. Because the Assessment never became law, no one can know which county schools would have received aid; indeed, the first of these schools did not open its doors until decades later. See W. Miller, First Liberty 26 (2003); see generally J. Buck, Development of Public Schools in Virginia 1607–1952 (1952). But historians and legal scholars have uniformly understood the opt-out provision as a considered attempt to accommodate taxpayers who did not want their tax dollars to go to religion. See Berg & Laycock, supra, at 244, n. 113 (the “provision for payment to a school fund was not an effort to support religious schools as part of support for education overall,” but rather “was an effort to accommodate the possibility of non-Christian taxpayers”); T. Buckley, Church and State in Revolutionary Virginia, 1776–1787, p. 133 (1977) (under the “text of the proposed bill . . . nonbelievers would [not] be forced to contribute to religion” because “[t]he assessment had been carefully drafted to permit those who preferred to support education rather than religion to do so”); see also, e.g., Miller, supra, at 26; Underkuffler-Freund, Separation of the Religious and the Secular: A Foundational Challenge to First Amendment Theory, 36 Wm. & Mary L. Rev. 837, 889–890, n. 265 (1995); Adams & Emmerich, Heritage of Religious Liberty, 137 U. Pa. L. Rev. 1559, 1573 (1989); Laycock, “Nonpreferential” Aid to Religion: A False Claim About Original Intent, 27 Wm. & Mary L. Rev. 875, 897, and n. 108 (1985–1986); L. Pfeffer, Church State and Freedom 110 (rev. ed. 1967).

Print this transcript Transcript: 

ORAL ARGUMENT OF NEAL K. KATYAL, ON BEHALF OF THE UNITED STATES, AS AMICUS CURIAE, SUPPORTING THE PETITIONERS

Chief Justice John G. Roberts: We will hear argument first this morning in Case 09-987, Arizona Christian School Tuition Organization v. Winn and the related case, Garriott v. Winn.

General.

Neal K. Katyal: Thank you, Mr. Chief Justice, and may it please the Court:

For 13 years, Arizona has permitted private citizens to contribute money to private organizations set up by private individuals and has let those organizations use that money towards scholarships when individuals apply for them.

The Ninth Circuit erred first in finding that the taxpayer plaintiffs had standing, and second in striking the program down.

On standing, this lawsuit fails each of the three necessary elements.

Regarding injury in fact, the key point is this: Not a cent of the Respondent's money goes to fund religion.

If you placed an electronic tag to track and monitor each cent that the Respondent plaintiffs pay in tax, not a cent, not a fraction of a cent, would go into any religious school's coffers.

Justice Sonia Sotomayor: Mr. Katyal, their point is that this tax money does belong to the State that private individuals are using, because it is money that, even by the new amendment, says either you pay it to the State or you use it for this purpose, but it's the State's money and it's giving you by its largesse the right to redirect it.

That's their argument.

Neal K. Katyal: Right.

Justice Sonia Sotomayor: So it would be the taxpayers' tax dollars being spent on religion, if they could sustain their claim.

Neal K. Katyal: There are two problems with that.

One has to do with injury in fact.

The other has to do with redressability.

With respect to injury in fact, our point is as you track the taxpayers' dollars, it doesn't actually fund any religious program, unlike the -- unlike Flast and other cases in which this Court has considered taxpayer standing for religion.

Their complaint is not that the government is spending money that the taxpayers have -- money that has been extracted and spent of the taxpayers.

Their complaint is that someone else's money is not being extracted and spent enough.

And the relevant language in Flast says that for taxpayer standing to occur, it's, quote, "his tax money" must be extracted and spent, and here that is not occurring.

Now, with respect to the other argument, not injury in fact but addressability and causation, our point is this: It's speculative as to whether or not that chain of events that you spelled out, Justice Sotomayor, would actually happen.

As this Court said in Cuno, for example, when a tax credit is given sometimes that actually reduces the amount of money the government has to spend.

It doesn't increase it.

And so that's different than the direct outlay that was at issue in Flast.

Justice Stephen G. Breyer: Then is it constitutional if we get a new system?

Here's what the system will be: The taxpayers who are religious will be able to check a box and the check that they send to the IRS -- it's a possible system -- what happens is that that check is cashed by an official and the cash is given to the local priest to say prayers for the individual who contributed the money.

And in your view, there is no one who could challenge that?

Neal K. Katyal: Well, let me say two things about that.

First is: That is not all that different, Justice Breyer, than what we have today with 501(c)(3) deductions.

Justice Stephen G. Breyer: The difference is, of course, that in the one case it's a deduction and in this case you are paying it 100 percent with money that would otherwise go into the coffer.

I understand that.

But I am interested in, conceptually, does the government think that there is no one who could challenge that?

Neal K. Katyal: I don't think that any taxpayer could challenge that.

That is, depending on the hypothetical, Justice Breyer, I'm not sure if the government is specifying which religious organizations might be eligible for the check box.

But if the government is doing something that is underinclusive and only giving tax credits to one set of religious organizations, that's a Texas Monthly problem, as this Court--

Justice Stephen G. Breyer: If you go back into history, it could have been the case that the -- as long as they were fair to every religion, the first Congress could have funded prayers throughout the nation in churches for anyone to go and pray and that would not have violated the Establishment Clause, or if it had, nobody could have challenged it.

Neal K. Katyal: --No, Justice Breyer.

Two things on that.

First is: We are only talking about standing, not the merits.

And with respect to standing, if the government funded only religious organizations or religious prayer, I do think that other organizations would have standing -- not as a taxpayer, because this Court has been very careful in Flast and in Hein to say there is an extremely narrow exception for taxpayer standing, a narrow exception to Frothingham, but other organizations would have Texas Monthly standing because they're--

Justice Ruth Bader Ginsburg: Counsel, does anyone have standing, in your view, to challenge this scheme?

Neal K. Katyal: --The way this scheme is set up, our answer is no.

And I think that accords with this Court's general reluctance to confer taxpayer standing in this area.

Justice Ruth Bader Ginsburg: And if we leave out the fine points that you were discussing, isn't the underlying premise of Flast v. Cohen that the Establishment Clause will be unenforceable unless we recognize taxpayer standing?

Neal K. Katyal: I don't see that, Justice Ginsburg, in Flast.

I think Flast is a very narrow exception for when someone's dollars are being taken out of their pocket and spent by the government on religion, and I don't think that's happening here.

Justice Stephen G. Breyer: Flast is gone; is that right?

Flast is gone.

There is no more -- there is nothing more to Flast, because it just happened that nobody had thought of this system at the time of Flast.

Neal K. Katyal: Justice Breyer--

Justice Stephen G. Breyer: If they had, they could have -- what?

Neal K. Katyal: --Justice Breyer, I don't think Flast is gone at all when there is direct government outlays to spend on religion like Flast.

Justice Stephen G. Breyer: No, but there needn't be, because all you have to do to get around it is to create what we have here.

Neal K. Katyal: Well, I do think that that can get around it, that can get around it in some circumstances, and again, those who are underincluded in a government program may have standing, not as a taxpayer.

But at the end of the day, Justice Breyer, if that's the result, that's the result for every other clause in the Constitution.

Taxpayer standing is the most narrow of exceptions, and--

Justice Ruth Bader Ginsburg: But there is a plaintiff -- we have a Bill of Rights and most provisions have plaintiffs who are hurting, whose speech is being suppressed, but this one doesn't have.

It's in the Constitution like all the others, and I thought, to be candid, that that's what the problem was in Flast v. Cohen, and that's what the Court was responding to.

Neal K. Katyal: --I don't see that in Flast, Justice Ginsburg, but be that as it may, I think this Court in Valley Forge was very clear to say that if, at the end of the day, you can't find a plaintiff with standing, that is not an excuse to relax the -- our general requirements of Article III standing.

And here, if you granted the plaintiff standing, what you would be granting is, for the first time, a tax credit which is a complaint about someone else's money not being spent to a high enough level.

Justice Elena Kagan: So if you are right, General Katyal, the Court was without authority to decide Walz, Nyquist, Hunt, Mueller, Hibbs, this -- this very case, just a few years ago?

That the Court was out of authority to decide any of those cases, but somehow nobody on the Court recognized that fact, nor did the SG recognize that fact?

The SG participated, I believe, in each of those cases.

Neal K. Katyal: Right.

So let me say two things about that.

First is, I do think it is very much just like Frothingham, in which Frothingham had to deal with this exact problem.

The Court had conferred standing in taxpayer standing case after taxpayer standing case and then, when it was teed up and presented to the Court as a question about Article III standing, the Court said: No, we shouldn't have granted taxpayer standing in those cases.

So my answer to you is yes.

Now, I do think that this Court's decision in Hein I think reiterated some of the fundamental principles and the limits on Flast.

And I think the Court -- the plurality made quite clear that it would go no further than the facts of Flast.

And to grant standing here, you have to go -- tremendously depart from what Flast is about: A direct government outlay of funds out of -- taking money out of someone's pocket to fund religion.

Justice Anthony Kennedy: I just want to make sure I heard your answer to the -- you said your answer is yes.

In other words, you agree with Justice Kagan's criticism of those cases and you said, yes, she's right; those cases were wrongly decided.

Neal K. Katyal: They could have gone out -- the results may have been the same.

It just would have been -- would have been on standing instead of on the merits.

Mueller, for example, upheld the programs.

So the bottom-line decision would have been the same, but the way in which the Court got there would have been so that there was no--

Justice Anthony Kennedy: But you would have said there would have been no standing in those cases.

Neal K. Katyal: --No taxpayer -- no taxpayer standing.

Now, there may have been other forms of standing, Texas Monthly standing, that could have been alleged to challenge those programs, yes.

Justice Ruth Bader Ginsburg: But it wasn't -- it wasn't -- I don't remember whether the government participated in the Winn case when it came up under the Tax Injunction Act.

Neal K. Katyal: We did, and in the first footnote--

Justice Ruth Bader Ginsburg: And there wasn't a word from the government about lack of standing.

Neal K. Katyal: --The first footnote in the brief, Justice Ginsburg, acknowledged the fact that standing hadn't been pushed or pressed below.

But I acknowledge that, particularly in the wake of Hein, should another case arise, the government will -- will acknowledge the standing defects and brief them as we are here.

Our point on redressability is not simply that the -- that the tax -- that the cost of the program is speculative.

It's also that the relief that the plaintiffs are seeking in this case won't redress their problem.

That is, if you gave the plaintiffs everything they are asking for, the very same religious schools and the very same religious STOs would continue to be funded.

The very same religious STOs would continue to be funded because they would leave in place -- and this was my answer to Justice Breyer -- the tax deduction, the 501(c)(3) tax deduction.

So there would still be government revenue being spent in favor of these religious STOs under their program.

It would just be at the level of one-third instead of 100 percent.

I don't think that satisfies their problem.

I don't think James Madison's remonstrance would be satisfied if Madison were told: Well, you're not going to be taxed three pence, you will be taxed one pence.

The principle is what matters, the principle of Flast.

If I could reserve the balance of my time.

Chief Justice John G. Roberts: Thank you, General.

Ms. Bickett.

ORAL ARGUMENT OF PAULA S. BICKETT ON BEHALF OF THE PETITIONERS

Ms Bickett: Mr. Chief Justice, and may it please the Court:

Arizona's tuition tax credit does not violate the Establishment Clause, because it's a neutral law that results in scholarship programs of private choice.

It's neutral because, like the tax deduction that the Court upheld in Mueller, it's one of many tax-saving devices, including some 26 other credits that are available to Arizona taxpayers on a neutral basis.

Justice Elena Kagan: Ms. Bickett, could you explain something to me just -- I have been puzzling and puzzling over this scheme.

Can you tell me why Arizona adopted this sort of scheme rather than the more typical tuition voucher scheme?

In other words tuition voucher schemes the state just gives the voucher or scholarship or what have you.

This is so much more complicated and complex and unusual.

And it just left me wondering why it was chosen or what the State thinks the advantages of it are now?

Ms Bickett: Yes, Justice Kagan.

One of the things that is true in Arizona that was not true in Ohio is that under the Arizona Constitution any direct aid to private schools is prohibited.

The other thing about the tax credit program is that it does encourage contributions not only from parents but from the community at large.

And this then provides money for low-income students, students from low-income families.

Justice Anthony Kennedy: Does the record show the extent to which there are donations by people who do not have students?

Ms Bickett: Could you--

Justice Anthony Kennedy: Does the record show the extent to which there are these additional donations that you just referred to?

Ms Bickett: --Your Honor, of course it was at a motion to dismiss phase.

What the record shows is that there's some reports that -- studies that have been done that show that there have been some children that have switched from public schools to private schools as a result of the program, that many of the scholarship programs are -- in fact, most of the scholarship programs provide scholarships based on financial need.

Justice Antonin Scalia: You haven't -- I don't think you answered his question.

The question was, is there anything in the record that shows whether any of the money that's involved here comes not from parents, but rather from others who can contribute to the program?

Ms Bickett: Well, what the record shows is that there have been -- there is a large amount of contributions.

There is $55 million.

It doesn't -- we have Arizona Department of Revenue reports that list the number of contributors and who contributes -- or not the individuals who contribute.

I -- it doesn't specifically line out who the contributors are, whether they are parents or whether they are not parents.

Justice Antonin Scalia: Well, I suppose if some of the contributions are considerable, like a million dollars, that couldn't be just a parent, right?

Ms Bickett: Right.

Justice Antonin Scalia: Are there contributions of that size?

Ms Bickett: Again, the record doesn't show what the size of the contributions are.

It shows the number of contributions and the total amount of contributions.

Chief Justice John G. Roberts: You only get -- if you give a million dollars, you still only get a $500 tax credit, right?

Ms Bickett: That's correct, Your Honor.

The programs are programs of private choice, because any aid that reaches religious schools does so after only after at least four levels of private decisionmaking.

Arizona sets up the neutral rules for the -- this tax credit, and after that private individuals and organizations take over.

Anyone can form a school tuition organization, and the increase in the number and diversity of school tuition organizations over the 13 years that the tax credit has been in existence demonstrates infact that this is free for everyone to participate in.

Justice Stephen G. Breyer: Something that worried me in Zelman is this, and I might get your answer.

Probably Arizona spends some billions of dollars on public schools, doesn't it?

I don't know what the exact amount is.

Ms Bickett: Yes, Your Honor.

Justice Stephen G. Breyer: Let's take 30 or 40 percent of that and spend it through this program on religious schools.

Imagine that happens.

At that point people might get into considerable discussion about what qualifies, when it doesn't qualify, whether it's a balanced school or is it just teaching religion, and what the rules and regulations are.

How is Arizona dealing with this problem?

By saying there are no regulations, by saying that we're not -- is there a system for dealing with the legitimacy and circumstances under which a particular religion's schools qualify for this program?

Who decides and how?

Ms Bickett: Under the tax credit program--

Justice Stephen G. Breyer: Yes.

Ms Bickett: --the schools have to be qualified private schools in order to participate in the tax credit.

Justice Stephen G. Breyer: And that must be a set of regulations and rules.

Ms Bickett: Primarily what it is, is that private schools in Arizona satisfy the compulsory education law as long as they meet the requirements that the public schools have in terms of providing qualitatively the subject matter that the public schools--

Justice Antonin Scalia: And those standards have nothing to do with this program.

They are standards that any private school, religious or otherwise, must meet in order to satisfy the education requirements of Arizona?

Ms Bickett: --That is correct, Your Honor.

Justice Stephen G. Breyer: And when do they teach the religion part of their program?

Ms Bickett: Excuse me?

Justice Stephen G. Breyer: I mean, when does a private school -- normally the schools -- I'm not an expert, but what you have to do to be a school is a very complex thing, and you have all kinds of requirements that eat up quite a lot of the day.

And I just wonder how the religion part fits in.

Has there turned out to be no problem?

When do they -- do they teach religion at 6:00 in the morning?

Does it matter if the person's qualified?

How does the -- I once had a case on this in the First Circuit and it came out to be surprisingly complex, and I just wondered how -- if there turned out to be any problem at all in Arizona in this area.

Ms Bickett: Justice Breyer, the record doesn't reflect that and I am not aware of any problem with private schools in Arizona and certainly not that have participated in this tax credit program.

Justice Anthony Kennedy: Suppose that an STO -- this is a hypothetical case -- discriminated on the basis of race.

No Hispanic or no white or no black can receive our money.

Suppose there is no Federal statute on it, no State statute prohibiting it.

Would there be a constitutional violation, a Federal constitutional violation?

Ms Bickett: If it was -- if it was a private institution--

Justice Anthony Kennedy: It's an STO.

Ms Bickett: --And so that is a private organization.

Justice Anthony Kennedy: All right.

There are no attributes of State action that would suffice to allow a discriminated person to bring suit, a person who has been discriminated against?

Ms Bickett: As long as there was not a Federal law that applied to the organization--

Justice Anthony Kennedy: The hypothetical is no Federal statute, no State statute.

It's a State action question is what I'm asking.

Ms Bickett: --Unless the discrimination could be attributed to the State, the State's direction, then--

Justice Anthony Kennedy: Don't you think a strong argument can be made that it can be attributed to the State.

The State has all sorts of rules about what an STO has to be.

The State provides the mechanism through the credit for the funding.

Justice Sonia Sotomayor: Limits the funding.

Justice Antonin Scalia: I assume that there is a tax deduction for contributions to churches?

Ms Bickett: --Yes, Your Honor.

Justice Antonin Scalia: And many churches discriminate on the basis of religion, don't they.

Ms Bickett: Yes, they do.

Justice Antonin Scalia: Does that pose a constitutional problem, do you think?

Ms Bickett: No, Your Honor.

Justice Anthony Kennedy: What about -- what about the answer to my question?

Ms Bickett: Well, Your Honor, because STOs are 501--

Justice Anthony Kennedy: You are saying the STO -- you are saying the STOs are sufficiently private so they can do this?

Ms Bickett: --Because they are--

Justice Ruth Bader Ginsburg: There was a case in this Court, the name of it was Bob Jones.

It was a private school and it discriminated on the basis of race.

And the question was whether they could have tax-exempt status so that there could be donations to them.

Do you remember the outcome of that case?

Ms Bickett: --Yes, Your Honor.

The Court held that the Department of Revenue could preclude the university from having tax-exempt status because that violated public policy, and therefore they were not entitled to 501(c)(3) status.

And so too here, all of these organizations are 501(c)(3) organizations, so they would not be able to discriminate based on race.

Justice Elena Kagan: Could I try Justice Kennedy's question in a slightly different way.

I'm assuming that you would agree that if this was just a straight tuition voucher program, the State could not give tuition vouchers on the basis of religion, could not say, if you are a Catholic you don't get these tuition vouchers.

But what the State has done here, apparently, is to set up a scheme that uses intermediaries that can make exactly that distinction, that can say, sorry, if you are a Catholic you don't get scholarships out of our STO.

And the question is why should the State be able to do that?

If the State can't do it itself in providing tuition vouchers, why should the State be able to set up a system using intermediaries that exist for no other reason than to administer this program that can make those distinctions?

Ms Bickett: Your Honor, the State is not making those decisions.

It's private organizations.

And anyone can set up a school tuition organization.

School tuition organizations that support solely secular schools are in existence and there has been no problem setting those up.

Five of the top ten STOs do provide scholarships to any school of the parents' choosing--

Justice Elena Kagan: But the plaintiffs contend, the plaintiffs contend and this is a motion to dismiss, so we have to accept their contentions as settled, that there are STOs that make these distinctions that clearly would be impermissible if the State administered the program.

These are not preexisting charitable organizations.

They are not preexisting schools.

They are entities that are set up solely for the purpose of administering this program, and yet the State is saying it can make distinctions that the State itself cannot.

Ms Bickett: --Your Honor, if I might correct you, there was one school tuition organization that preexisted the tax credit, and certainly the private schools that participated in these for the most part did exist before this school tuition organization.

What this program allows private organizations to do, it allows parents to get together with private schools and form school tuition organizations that then--

Justice Ruth Bader Ginsburg: You said there was an STO before this program, but it didn't get the benefit of money from taxpayers.

That would have gone -- that money went to -- to Arizona, not to the STO before this scheme was created.

Ms Bickett: --Before this scheme was created, they would have gotten a tax deduction, a federal tax deduction and a State tax deduction instead of a tax credit.

But the difference -- there is not a significant difference between a tax credit and a tax deduction in terms of constitutionality.

The only difference between a tax deduction is that for purposes of a tax deduction it depends on -- the value of it depends on the tax bracket of the taxpayer, whereas a tax credit, the value depends -- is equal for all taxpayers that owe taxes.

And this Court has never made a distinction between tax credits on the one hand or tax exemptions or tax deduction.

Under Respondents' theory, any money that the government doesn't take in would then be the equivalent of State money and that would then undermine 501(c)(3) corporations and all kinds of charitable organizations.

What you need to look at in -- when Arizona decided to give a tax credit for this is it was thinking is this a worthy public purpose to not take in certain money that -- that the State would normally be entitled to if they give contributions to that purpose.

So, it's not a question -- and that -- that type of purpose has been upheld by this court in Walz, in Hernandez.

and there, again, there is not a basis for distinguishing here between what Arizona is doing and other 501(c)(3) organizations that have for years been able to enjoy the benefits of tax savings, tax benefits, and help give scholarships to religious organizations.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Bender.

ORAL ARGUMENT OF PAUL BENDER ON BEHALF OF THE RESPONDENTS

Mr. Bender: Thank you, Mr. Chief Justice, and may it please the Court:

I would like to start with Mr. Katyal's statement that if we win this case you don't get any relief because as much money would go into religious education as goes now.

That shows he does not understand our claim.

Our claim is not that money is going -- that State money is going to religious schools.

Our claim is that State money is being given to the beneficiaries of a State spending program on the basis of religion.

It's a claim about discrimination in the distribution of these stated funds.

Justice Antonin Scalia: But there is a discrimination, I get it.

The school that seems to get the most money on the list doesn't appear to be a religious school at all.

It's not even discrimination between religion and non-religion, if you think that that is invalid, which I don't.

But it doesn't favor religion at all.

Mr. Bender: I didn't say it favored or disfavored religion.

Justice Antonin Scalia: Then what's your problem under the Establishment Clause?

Mr. Bender: The problem is that government benefits in a government benefit program cannot constitutionally be given to the beneficiaries of the program on the basis of their religion.

If a parent comes to one of these--

Justice Antonin Scalia: You can't have a government program that gives out money indiscriminantly to certain organizations that say provide hospital services, and it would be unconstitutional if that included organizations that were religious organizations, as well as organizations that were not.

That would be unconstitutional?

Mr. Bender: --Let me try to clarify.

Justice Antonin Scalia: So you must positively disfavor religion?

Mr. Bender: No, you must not.

You must give the money to the beneficiaries without taking the beneficiaries' religion into account.

Suppose the government set up--

Chief Justice John G. Roberts: How does this take the beneficiaries' religion into account when the program works perfectly in exactly the same way if it's a nonreligious school?

They don't care whether it's a religious school or not.

Mr. Bender: --Because the STOs are giving out government funds.

The STOs are on the government's behalf distributing tax revenues.

Suppose that--

Chief Justice John G. Roberts: No, no.

I'm trying -- I don't think that was my -- I hope that wasn't my question.

It's how is it discriminating on the basis of religion if the STOs, the government money, it doesn't care whether it goes to a religious school or not.

It's treated the same?

Mr. Bender: --The STO -- most money is given out by STOs that do care whether it goes to a religious school.

Chief Justice John G. Roberts: The State money going to the STO, the State doesn't care whether it goes to a religious STO or a secular STO.

Mr. Bender: That doesn't matter.

If the State's grantee cares, that's unconstitutional.

Chief Justice John G. Roberts: I thought we've held that when you have the decision is made by a private entity whether to use the money to go to a religious school or a nonreligious school, that that doesn't violate the Constitution because the decision is not made by the State, it is made by the private recipient.

Mr. Bender: I believe the Court held the opposite in Bowen, where the decision to use the money for religious purposes was made by the grantee, not made by the government.

The government program in Bowen was completely religiously neutral.

Grantees were given funds to educate adolescents in sexuality.

The Court held -- and Chief Justice Rehnquist wrote the opinion -- that, although the program was constitutional on its face because -- it wasn't unconstitutional because religious organizations could participate as grantees.

It would be unconstitutional if those organizations distributed the benefits of the program on the basis of religion.

Think about a Head Start program.

Suppose the government sets up 50 Head Start programs in a particular community.

They are all run by private organizations, some religious, some not.

Chief Justice John G. Roberts: I'm sorry, could we get -- just to get back to Bowen for a moment.

Mr. Bender: Yes.

Chief Justice John G. Roberts: The entities that were distributing the funds could be private or religious?

Mr. Bender: Same as here, yeah.

Chief Justice John G. Roberts: The entities in Bowen were not identified.

The recipients of the State funds were, as here, they weren't identified as religious or not?

Mr. Bender: I don't understand.

In Bowen I think the Court held, in the as-applied part of Bowen, that if the grantees were to give out their services on the basis of religion that would violate the Establishment Clause.

Justice Antonin Scalia: Do we know that the schools here do that?

There are some religious schools.

Do we know that these religious schools do not admit people except of a certain religion?

Mr. Bender: Well, I think we do know that and the complaint alleges that, but that's not the point.

The point is not what the religious schools do, the point is what the STOs do.

The STOs are government grantees.

They are distributing government funds.

The Constitution prohibits organizations that distribute government funds as part of a government spending program to do it on the basis of religion.

Justice Antonin Scalia: That's a great leap to say that it's government funds, that any money the government doesn't take from me because it gives me a deduction is government money.

I mean, that's the first leap you make.

Mr. Bender: This is money that the government takes from people.

Justice Antonin Scalia: This money has never been in the government's coffers.

The government has declined to take this money.

Mr. Bender: But it's money that's raised by the State's income tax.

Every tax-credited dollar is a dollar that has to be paid either to the government as income taxes due or to an STO.

Justice Antonin Scalia: Well--

Justice Anthony Kennedy: I'll -- I'll give you credit, Mr. Bender.

In your brief you say if you are wrong on that point that you are folding your tent and leaving, there's -- that there is no standing and that there's no -- no violation.

But I must say, I have some difficulty that any money that the government doesn't take from me is still the government's money.

[Laughter]

Mr. Bender: But it does take it.

Justice Anthony Kennedy: Let me ask you.

If -- if you reach a certain age, you can get a -- a card and go to certain restaurants and they give you 10 percent credit.

I think it would be rather offensive for the cashier to say,

"and be careful how you spend my money. "

[Laughter]

But that's the whole point of your case.

Mr. Bender: The money -- no, it's not.

With respect, Justice Kennedy, the money that's involved in this case is money that is generated by imposition of the State's income tax, not by non-imposition of it.

If there were no State income tax there would be no tax credit program.

Justice Samuel Alito: Would you say the same thing about a tax deduction?

Mr. Bender: Would I say what about the tax deduction?

Justice Samuel Alito: That it's the government's money?

Mr. Bender: No, I wouldn't because a tax deduction--

Justice Samuel Alito: Because they are kind enough to give me a tax deduction -- because they are kind enough to give the taxpayer a deduction for certain contributions?

Mr. Bender: --Because when a taxpayer makes a charitable deduction, that charitable deduction is made from the taxpayer's money.

At the time the taxpayer makes that deduction, the taxpayer can do anything he wants with that money.

That's not true of this tax credit.

At the time this tax credit is taken, the taxpayer owes the government, let's say, $5,000 in State income taxes.

You've got to pay that $5,000.

You can't keep it.

It's not your money.

You can't keep it.

It's not that all of your money is the government's money; it's that this $5,000 that you owe the government as income taxes is the government's money.

Justice Samuel Alito: Why isn't this true of a tax deduction also?

And this is a very modest tax credit.

The tax deduction that a wealthy person would get by making a contribution to a college or university that has a religious affiliation is much more valuable than this $500 credit.

Mr. Bender: It doesn't turn on whether it's valuable or not.

It turns on whether when the taxpayer makes the payment the taxpayer is paying the taxpayer's own money or money the taxpayer owes to the government.

When you make a charitable contribution, you are using your own money.

That's not money you owe to the government.

You don't know how much money you owe to the government until you figure out your taxes.

This credit doesn't come into play until you figure out your taxes.

And then if you owe the government--

Justice Samuel Alito: I completely don't understand that.

Somebody does know.

It's December 31st.

They know -- they figure out how much tax they are going to have to pay for that year.

They know exactly.

They can know exactly what their taxes will be.

And it will be X, and if they make a -- a deduction, then it will be X minus Y.

What is the difference?

Mr. Bender: --The difference is -- that -- to me the broad difference is that the tax deduction is given for charitable contributions.

And I think the Court would decide if it faced the question -- I don't think it's ever had to -- that it is constitutional for the government to support private charity.

And if the government is going to support private charity by letting you deduct charitable contributions, it can't leave religious charities out of that program.

That would violate the Establishment Clause.

So if you believe that the charitable deduction in the federal income tax is the constitutional thing for the government to do, to support private charity by picking up part of the tab -- that's true when there is a deduction -- then you have to give the deduction to people who contribute to religion.

So, yes, there is a government support for that private charitable contribution, but it's a charitable contribution.

The money in this case is not a charitable contribution.

Mr. Katyal says that it's not the government's money.

Whose money is it?

Is it the taxpayer's money who gives the $1,000 contribution?

No.

If you don't take my word for it, look at what the STOs say on their web sites about this program.

One of them says quite frankly: Hey, you can give charity with someone else's money; it's a miracle.

Another one says: It won't cost you anything; you can give charity with other people's money.

Justice Samuel Alito: Can I ask you--

Mr. Bender: Whose money is it?

Justice Samuel Alito: --what difference does it say on their web sites?

There is a very important philosophical point here.

You think that all the money belongs to the government--

Mr. Bender: No.

Justice Samuel Alito: --except to the extent that it deigns to allow private people to keep some of it.

Mr. Bender: I do not.

Justice Samuel Alito: It doesn't take it by taxes.

Mr. Bender: No.

Justice Samuel Alito: That's what your whole argument is based on.

Mr. Bender: No, it isn't, Justice Alito.

My argument is that if the government imposes an income tax, and people owe the government a certain amount of money in income taxes due, that -- and the government says you don't have to pay it to us, you can pay it to a STO, that that is a payment of government funds.

Justice Antonin Scalia: --They don't owe it to the government if they have made this contribution.

That's the whole point.

Mr. Bender: It's not a contribution.

Justice Antonin Scalia: They don't owe the tax to the extent that they have given money to one of these institutions.

You -- you say -- you posit at the very beginning that you owe a full amount of tax.

That is just not true.

You don't owe the tax if you've made the $500 contribution.

Mr. Bender: I -- I disagree with that.

I think--

Justice Antonin Scalia: You owe the tax?

Mr. Bender: --If you look at the Arizona income tax form it says: Here's your income.

Apply the tax rate to the income.

Here are your taxes due.

$5,000.

You may pay that in part by giving $1,000 -- by paying $1,000 to an STO.

You are paying your taxes.

When taxpayers take this $1,000 credit--

Justice Antonin Scalia: That's the problem; they have to revise their form.

Mr. Bender: --No.

[Laughter]

Justice Samuel Alito: So that it's a deduction before the line.

This is a major lawsuit?

Mr. Bender: This is a government spending program.

Is there any doubt about that?

The money in this program is not private charitable contributions.

Justice Stephen G. Breyer: If you assume that it is a -- I see your argument there.

Now, in Zelman the holding, I would think -- which I was not in agreement with, but it's now law -- that government can have a -- a spending program.

And what they did was the government spent money in the form of vouchers to be given to private individuals to use for such education as they wish, that met certain standards, including religious schools.

So what's the difference between the program here and the one that was held constitutional in Zelman?

Mr. Bender: The difference is that in Zelman the money went to the parents without any religious discrimination.

Religion was not involved in the distribution of the money to the parents.

The parents in Zelman got funds based on their financial need and the fact that their children went to school in Cleveland, which was a failing school district.

And the program was to give them, based on their financial need, was to give them a voucher.

In giving a parent a voucher, nobody said to the parent, what's your religion?

Nobody said to the parent, are you going to send your child to a religious school?

The Court said as clearly as it could in Zelman that that would be unconstitutional.

Justice Stephen G. Breyer: But who here says to the parent who is going to the school, what is your religion?

Mr. Bender: The STO who gives them the scholarship.

Justice Stephen G. Breyer: In other words, the STO gives the scholarship only to Catholics to go to Catholic schools--

Mr. Bender: Yes.

Justice Stephen G. Breyer: --only to Jews to go to Jewish schools?

Mr. Bender: Exactly, exactly.

Most of the money--

Justice Antonin Scalia: But the government money you claim is at issue here is -- is the money that the contributor to the STO has failed to give to the government when it's the government's money.

Now, that decision, of whether to give the money to an STO or not, whether to give it to a religiously affiliated STO or a nonaffiliated one, that is in the hands of a private individual, just as the voucher program was.

Mr. Bender: --True.

Justice Antonin Scalia: There's -- there is no religious discrimination in that choice.

Mr. Bender: Let me -- let me put it to you this way, Justice Scalia.

Suppose the government in this case gave the money to the STO's directly itself, and the STO's then gave out the scholarships.

Would it be constitutional for an STO to say to a parent who comes asking for a scholarship, are you Catholic?

If you're not, we won't give you a scholarship.

Justice Antonin Scalia: Perhaps not, but you have--

Mr. Bender: What's the difference?

Justice Antonin Scalia: --You have an intervening parent or contributor.

And it's that person who is making the decision of whether to give it to a religious or nonreligious organization; it isn't the government making that decision.

Mr. Bender: No.

It's not a parent, by the way.

Justice Antonin Scalia: And that was the same thing in Zelman.

Mr. Bender: It's not a parent, by the way, in answer to Justice Kennedy's question before.

Parents under this program are not allowed to give contributions for scholarships for their own children.

The people who get the -- who can claim the tax credit, the person who gets the scholarship cannot be a dependent of the person who gives the--

Justice Stephen G. Breyer: Suppose they change one rule and the rule that the STOs had was this, they said: We will give you tuition if you otherwise qualify for your child to go to the school that you wish to go to, and if you are Jewish or you are Protestant and you want to go to St. Joseph's Catholic school, that's absolutely fine, they won't kick you out, and vice versa.

Now, in your opinion that then would be constitutional?

Mr. Bender: --Yes.

We only challenge--

Justice Stephen G. Breyer: The answer is yes?

Mr. Bender: --Yes.

Justice Stephen G. Breyer: So the only thing you are challenging is the rule that they will not -- the STOs will not give the scholarship to a Protestant to go to a Catholic school.

How do we know they would -- that that is the rule.

Mr. Bender: We allege that the STOs that give out the majority of the funds -- I think now it's about 70 percent of the funds -- that the STOs that give out a majority of the funds only give the funds to parents who will send their child to a religious school--

Justice Stephen G. Breyer: Ah.

Ah, but that's--

Mr. Bender: --designated by the STO.

Justice Stephen G. Breyer: --That's different.

You were complaining about: I'm Jewish; I want my child, let's say, to go to St. Joseph's; and -- so now, do I qualify or not?

The only thing--

Mr. Bender: That depends on the STO you go to.

Some of the STOs--

Justice Stephen G. Breyer: --Your -- your complaint is only with the STOs that wouldn't let you send the child.

Mr. Bender: --Exactly.

Justice Stephen G. Breyer: We know that they exist because?

Mr. Bender: We allege they exist and no one doubts that.

Justice Sonia Sotomayor: I'm sorry.

I just want to make sure I understand your complaint.

You just said to Justice Breyer that your complaint was that the STOs are giving scholarships based on the student's religion.

Mr. Bender: Yes.

Justice Sonia Sotomayor: I thought another part of your complaint was that the STOs were giving just to the religious schools.

Mr. Bender: STOs don't give scholarships to religious schools.

They give scholarships to parents.

The parents are awarded the scholarships, not the schools.

Justice Sonia Sotomayor: But to attend that school?

Mr. Bender: To attend that school, yes.

Justice Sonia Sotomayor: So the essence of your complaint is that some of the STOs are requiring that the recipient, the recipient child, be of a particular religion?

Mr. Bender: That, and some of the STOs are also requiring that in order to get the scholarship the parent agree to send the child to a particular religious school.

Justice Antonin Scalia: Oh, but that doesn't -- that doesn't get you there.

That doesn't get you there, as Justice Breyer's interrogation indicated.

Justice Elena Kagan: But you are saying -- you are saying both, is that right, Mr. Bender?

You're saying both of those things?

Mr. Bender: Both of them, yes.

Justice Elena Kagan: Could I ask you: Is there -- do you understand the beneficiaries of this program?

Has the State said who the beneficiaries of this program are?

Are the beneficiaries of this program the parents, or are the beneficiaries of this program the general taxpayers?

Mr. Bender: The beneficiaries of this program are the parents and children.

That's what this program is for.

The State set up a program to help parents send their children to non-public schools, and to do that, they are going to give them scholarships.

Scholarship money is going to be made available.

Justice Elena Kagan: So I would assume, then, if the beneficiaries of the program are the parents, then it's the parents who have to be treated equally without regard to religion.

Mr. Bender: That's right.

Exactly.

The parent that -- the scholarships -- as Zelman said as clearly as it could, the scholarships have to -- in that case, the vouchers have to be available to parents on a religiously neutral basis.

The scholarships are not allowed to be made available to parents according to their religion or according to whether they will send their child to a religious school.

Both of those kinds of discrimination are going on here.

I think there--

Justice Ruth Bader Ginsburg: Mr. Bender, can I go back to your point -- you were making a distinction between a taxpayer who makes a charitable donation.

Well, that taxpayer has the whole universe to spend it on: Buying clothes, on gambling, on this charity, that charity.

But your point here is that this contributor does not have the universe to pick and is free to pick the charity.

This one has -- you either give it to the government or you give it to the STO.

Is that--

Mr. Bender: --Exactly.

Right.

Yes.

It's not the taxpayers' money.

It's confusing because we are talking about two kinds of taxpayers here.

We are talking about my clients, who are general taxpayers, whose money is being used to fund this program, and we are talking about the taxpayers who take the tax credit.

We have two different kinds of taxpayers.

Justice Samuel Alito: So if Arizona had a statute that gave an income tax deduction only to individuals who make charitable contributions to educational institutions, there would be a problem there, because they -- it wasn't a general tax exception for charitable contributions?

Mr. Bender: No, Justice Alito.

I think it would be constitutional if it said you get a deduction for making a charitable contribution to an educational organization, and that can include a religious educational organization, because if it didn't, it would be unconstitutional.

You can't set up a program that gives you a deduction for giving to an educational institution but not to a religious organization.

That would be unconstitutional.

If you are going to support private charity, you have to support religious charity in the same way you support non-religious charity.

But if you're going to have somebody--

Justice Samuel Alito: I thought your answer to Justice Ginsberg was the difference between this and the Federal tax deduction for charitable contributions was that the Federal tax deduction is available for a broad range of charities, whereas this is available only for a very narrow range.

Mr. Bender: --I may have misunderstood her question.

I think her question was: At the time the taxpayer makes the charitable contribution that he is going to take a deduction for, the taxpayer could do anything he wants with that money.

He can take a vacation.

He can give it to a charity.

He could buy clothes with it, buy food with it.

It's a completely open system.

Nobody tells the taxpayer what he has to do.

In this case, when the taxpayer writes that check to the STO, the taxpayer can't keep that money.

Can't use it on a vacation, can't use it for buying food.

Has to either pay it to the State or, with the State's authorization, pay it to an STO.

Justice Antonin Scalia: The same thing is true of charitable deductions.

When you take a charitable deduction, you don't have the money anymore.

You have given it to a charitable organization.

Now, you are allowed to give it to a particular religion, a particular church, and there seems to be nothing unconstitutional about that, right?

So what is unconstitutional here about the private -- the private decision to give a benefit to a -- an organization that only supports particular schools, and indeed, only supports people of a particular religion to go to that school?

I don't see any difference.

Mr. Bender: There is nothing unconstitutional about the taxpayers sending the money to an STO.

If STOs did not discriminate on the basis of religion in giving that money out, there would be no unconstitutionality.

Justice Antonin Scalia: But churches discriminate on the basis of religion.

When I take my charitable deduction to give it to a particular church, that church discriminates on the basis of religion, but that's okay.

Mr. Bender: If the government said to you: You can pay your taxes -- don't pay your taxes to us, pay them to a church, and the church gave its benefits only to people of a certain religion, I believe that would be unconstitutional.

Justice Antonin Scalia: So it's how the government puts it?

So it really is just that line in the tax form that you are concerned about, and the only relief you really need is -- is changing the tax form?

Mr. Bender: No, it's the difference between charity and paying your taxes.

When you make a charitable contribution, you are making a charitable contribution.

It costs you money.

In Arizona, if you make a charitable contribution of $1,000, it costs you $950 if you are at the maximum tax rate, because the maximum tax rate is 5 percent.

In Arizona, if you take this tax credit, it costs you nothing.

It's not charity.

Charity is something--

Chief Justice John G. Roberts: Excuse me.

Just to follow up on Justice Scalia's question, because I want to make sure we have the answer: If this system were set up exactly as it is now, but Arizona said contributions to STOs are deductible, you would have no problem?

Mr. Bender: --Contributions to STOs are deductible from one's income tax?

Chief Justice John G. Roberts: Right.

Mr. Bender: No, we would not have a problem with that.

Chief Justice John G. Roberts: So the only difference is that Arizona set up this system where you get a tax credit instead of a tax deduction?

Mr. Bender: Of course.

Justice Samuel Alito: And that would be true if even if the -- if the top marginal rate was 90 percent?

Mr. Bender: Yes, it would be true only if the top marginal rate were 90 percent, which is never going to happen in Arizona, believe me.

Justice Samuel Alito: But the Federal rate has been that high--

Mr. Bender: It's going in the other direction.

Justice Samuel Alito: --at times.

Mr. Bender: I understand.

Justice Samuel Alito: That's what the Establishment Clause terms on the--

Mr. Bender: Yes, because that's still charity.

If the top rate is 90 percent, when you give that money, it's your money; you can use it for anything you want.

And even if you are in the 90 percent bracket, you are giving some of your own money.

You are engaging in charity.

And the Constitution, I think, permits the government to subsidize private charity.

And if the government's going to subsidize private charity, it can't leave religious charities out.

So that's the dividing line.

Is the government subsidizing private charity?

In this case, the government is not subsidizing private charity because it is not private charity, because the tax--

Justice Samuel Alito: --If this is government money, then why would it be constitutional, in your view, for this scheme to exist if -- for the -- if the STOs did not discriminate at all on the basis of religion?

Mr. Bender: --Because it's perfectly okay to use government money for non-religiously discriminatory purposes.

You can get a tax credit for buying a solar water heater.

That is a 100 percent tax credit.

Now, that's a somewhat different kind of tax credit, because there, when you buy the heater, you get something for the money.

It's -- this tax credit is a very strange kind of tax credit.

This is a tax credit that is only used to pay your taxes.

That's the only function it has.

Justice Samuel Alito: You have STOs that say: We will only give scholarships for religion affiliated schools, but we will not discriminate on the basis of the student's religion.

Mr. Bender: Right.

Justice Samuel Alito: And if this is the government's money you think that would not be an Establishment Clause violation?

Mr. Bender: No, no, no.

If an STO discriminates either by saying we only give to people of a certain religion or we don't give to people of another religion or by saying we will only give you a scholarship if you send your kid to a religious school that we designate.

Justice Antonin Scalia: I thought you said the opposite earlier, I thought you said the opposite earlier.

Mr. Bender: I hope I didn't.

Justice Antonin Scalia: I'm sure you did.

Mr. Bender: Thank you for correcting me.

Justice Stephen G. Breyer: What is the problem with that?

That is to say, suppose that the government gives its money to put CAT scans in hospitals.

And it has certain beneficiaries.

And one group of beneficiaries is the Association Of Catholic Hospitals, another is the Association Of Jewish Hospitals, another is a set of totally secular hospitals.

So it gives the tax credits to all three.

Now, of course the Catholic group is going to give it to Catholic hospitals and so forth.

What is wrong with that?

Mr. Bender: I don't get your hypothetical.

Justice Stephen G. Breyer: What they do is they have government money, just like you claim this is, and they say we are going to give it to umbrella organizations like the Association Of Catholics, Jewish or secular hospitals and we expect them to distribute it.

And they will, of course, distribute it to those who are their members and in some cases their members are religious organizations and in some cases they are not.

Now, what is the difference between that and what happens here, leaving the student out of it?

Mr. Bender: It depends on who the beneficiaries of the government--

Justice Stephen G. Breyer: The beneficiaries of the government, Catholic hospital -- government CAT scan program will be Catholic hospitals, because they're the ones who belong to the Catholic Hospital Association.

Money will also go to the Secular Hospital Association, as it goes to a secular STO here.

So I don't see that part.

That's the last prong that we are talking about.

Mr. Bender: --I'm not clear on your program.

If it's a government program to benefit hospitals, the benefits have to go to hospitals on a religiously neutral basis.

Justice Stephen G. Breyer: The government says -- that's the different -- the government says -- it does give the money away on a religiously neutral basis, it gives it to hospital associations.

It turns out that some of those naturally are supposed to give it to their members, all of whom will be religiously affiliated.

Mr. Bender: But the hospitals are the beneficiaries, Justice Breyer, that's the difference.

The beneficiaries here are not the STO's, the beneficiaries here are the parents.

The STO's are a conduit of government funds to the parents.

The parents are the beneficiaries and the Constitution requires that the benefits of a government spending program go to the beneficiaries on a religiously neutral basis.

So in Zelman the beneficiaries were the parents, and the vouchers had to go to them.

Chief Justice John G. Roberts: I'm sorry, I don't understand the answer to Justice Breyer's question.

His question was, you give it to the hospital equivalent of the STO and then that gives it to hospitals on a religiously discriminatory basis.

Why aren't the hospitals the beneficiaries of that program just as you say the parents are here?

Mr. Bender: Well, if the hospitals are the beneficiary of the program, then the hospitals have to get the money on a religiously neutral basis.

Chief Justice John G. Roberts: Well--

Mr. Bender: The analogy would be the patients are the beneficiaries of the program.

The government wants to help cancer patients, and so it's going to give money to hospitals to help cancer patients, so it gives money to various hospitals under Justice Breyer's program.

If one of those hospitals says we only treat Catholic cancer patients, that's unconstitutional.

Justice Antonin Scalia: That's the other issue.

We are trying to separate in your argument the issue that some of these organizations are religiously affiliated from the argument.

That moreover, they will only give money to individuals of a particular religion.

Now, I understand your argument for the latter, but I must say I don't understand your argument for the former.

Not if you accept these other--

Mr. Bender: If I go to get a scholarship from an organization and they say where are you going to send your child with this scholarship?

And I say I haven't made that decision yet.

And they say well, we will only give you a scholarship if you send your child to a Jewish school which teaches people how to pray in the way Jewish people pray and has -- and it's education is Jewish religious education.

That's religious discrimination.

Chief Justice John G. Roberts: --Thank you, counsel.

Mr. Katyal, you have four minutes remaining.

REBUTTAL ARGUMENT OF NEAL K. KATYAL, ON BEHALF OF THE UNITED STATES, AS AMICUS CURIAE SUPPORTING PETITIONER

Neal K. Katyal: Thank you.

My friend said, I think I have this right,

"we are talking about my clients whose money is being used to fund this program. "

That's a nice description of Flast.

It is not a description of what's going on here.

Flast recognized a special -- special solicitude for taxpayers when money is taken out of their pocket and used to fund religion against their conscience.

Here, even if you accept all of this public money discussion that has been happening, not a cent of their money is going to fund--

Justice Stephen G. Breyer: Flast, I looked at again briefly, and it seemed to use that wonderfully precise word nexus.

And you are quite right that in Flast that was the case.

But why isn't it, given that it is a nexus in Flast, what was in Flast, why isn't it also a nexus where you have this complicated system which is designed to make the ordinary taxpayer pay a little more in this kind of instance, where what you've done is directly subtract from the treasury $5,000 cash to turn over, in the view of the plaintiffs, to a purely forbidden religious purpose?

Neal K. Katyal: --Justice Breyer, two things.

First, the relevant language in Flast is at page 106, it's not what the nexus test, it's the definition of what the actual tax payer claim is and it requires that

"his tax money being extracted was. "

Justice Stephen G. Breyer: Was that in that instance in Flast -- does Flast rule out?

Neal K. Katyal: And that's the general description Flast says about how taxpayer standing will go forward.

If there is any doubt about that, Valley Forge makes that clear because the dissenters said exactly what you said, which is look, let's just look to economic effects and that alone will be enough and it's just Property Clause, Tax And Spending Clause, it doesn't really matter, it's the bottom line on the treasury and this Court said no, that isn't the case.

Justice Elena Kagan: General Katyal, Flast could not have meant that it is your particular dollar.

There would be no way to know it's your particular dollar and that would be a silly and fictional thing to say as the plurality opinion in Hein makes clear.

What Flast said was that taxpayer dollars, not your dollar, but taxpayer dollars, are going to this activity in the same way that it's going to the activity here.

Neal K. Katyal: I disagree -- first is I don't think that is what Flast is.

I think Flast is about that micro-fraction of a cent that is coming from your pocket and being used to fund religion.

And that is what Madison complained about, it may be very small, it may be 3 cents, but there is a special harm of conscious when it's your money, your hard earned money being used to fund a program directly as to which you don't like.

Justice Elena Kagan: Flast talk about a nexus the way Justice Breyer said and here is a taxpayer challenging a provision of the tax code, an active pursuant to the tax and spending power that grants a tax benefit.

That's as close a nexus as you are going to get using the language of Flast.

Neal K. Katyal: Again, I think that doesn't deal with the direct injury on the taxpayer, which is the language of Flast.

Even if you disagree with me, the harm here is a lot more speculative, just like Cuno, because you have to posit in order for the harm to exist to this taxpayer, that tax credits will cost the government money, not save it, that his tax burden will go up as opposed to someone else's tax burden, a corporation and the like, or you have to posit that the government won't cut spending in order to make up the shortfall in revenues that he says is going to exist.

You're going to have to do all of those things, none of which you have to do in a Flast situation because it's a direct outlay of funds.

If I could just can spend a moment on Justice Kennedy's question about state action, which of course they didn't advance below as the Ninth Circuit said.

I think it's this Court's precedence are quite clear in saying that the fact that the government regulates or funds something doesn't transform it into a state actor.

If it did, then all 501(c)(3)'s would become state actors, and that, I think, would be an enormously damaging precedent for this Court to follow.

Rather, I think what Blum says is that it requires the performance of a traditional executive prerogative -- additional government prerogative and here all the STO is doing is funding -- it's handing out money and it's doing so on a neutral basis, anyone can form an STO, and anyone can fund one.

Chief Justice John G. Roberts: Thank you, General.

Counsel, the case is submitted.

Print this transcript Transcript: 

Justice Kennedy: The Arizona Tax Code allows private individuals to claim dollar-for-dollar state tax credits for contributions to school tuition organizations, and these are called STOs.

The STOs, school tuition organizations use the private contributions to provide scholarships to students attending private schools, and these include religious schools.

A group of Arizona taxpayers sued the Director of the Arizona Department of Revenue.

The taxpayers contend that the Arizona's STO tax credit constitutes a subsidy of religion in violation of Establishment Clause principles.

The Court of Appeals for the Ninth Circuit reached the merits of that argument.

It concluded that the taxpayers had stated a valid claim under the Establishment Clause.

We now reverse.

The Court cannot reach the merits of taxpayers Establishment Clause claims unless it finds that the Court has jurisdiction to resolve the dispute.

And an essential element of federal jurisdiction is the requirement that the parties have standing.

They must show, not only that they've suffered an actual injury that was caused by the illegal action complained of, but also that the injury would be remedied by a judicial decree.

Under Article III of the Constitution, standing is a necessary ingredient if any case or controversy appropriate for resolution in federal court.

Case and controversies are constitutional terms that define an Article III jurisdiction.

Respondents contend that they have standing to maintain this action for one and only one reason, because they are Arizona taxpayers.

But the mere fact that someone is a taxpayer, does not normally establish standing.

In general, people do not have a continuing legal interest in ensuring that their tax payment -- payments are spent in a lawful manner, and this principle is well settled.

Now, to overcome that general rule against taxpayer standing, respondents rely on an exception, and the exception is contained in a opinion announced by this Court in 1968, that's the case of Flast versus Cohen.

Under Flast, individuals suffer a particular injury when in violation of the Establishment Clause and by means of the Tax Code, their property is transferred through the Government's Treasury to a sectarian entity.

And as the Flast Court put it, "The taxpayers' allegation in such cases would be that his tax money is being extracted and spent in violation of specific constitutional provisions against such abuses of legislative power."

Flast recognized that under the First Amendment's Establishment Clause, taxpayers suffer a unique injury, a violation of conscience, when their funds are extracted and spent in service of an establishment of religion.

Here, the respondents are taxpayers.

The STO tax credit does not extract and spend their funds in service of an establishment.

Rather, the taxpayers are free to pay their own tax bills.

They could also contribute to a religious or secular STO of their choice, or they could obtain a different tax credit by making a different charitable contribution.

The STO tax credit is not tantamount to a religious tax.

The Court's opinion today concludes that the taxpayers also fail to satisfy the other requirements for Article III standing.

STO contributions result from the decisions of private taxpayers regarding their own funds.

As a result, any injury the objectors may suffer would not be fairly traceable to the State.

And the court order, prohibiting operation of the STO tax credit, would not affect respondents or their tax payments.

Because there is no jurisdiction to hear the taxpayers' lawsuit, the judgment of the Court of Appeals must be reversed.

Justice Scalia has filed a concurring opinion in which Justice Thomas joins.

Justice Kagan has filed a dissenting opinion in which Justices Ginsburg, Breyer, and Sotomayor joined.