First, the background. Federal courts are constitutionally limited to adjucating “cases” and “controversies,” which over the years has been interpreted to mean that in order to bring suit, the plaintiff must be able to show “standing,” i.e., some sort of individualized harm resulting from the challenged action. As relevant here, that means that taxpayers ordinarily do not have standing to contest government action simply because they don’t think their tax dollars should be used in a certain way. The courts have repeatedly held that misuse of tax dollars is not enough “individualized harm” to allow a federal lawsuit to challenge government action.

However, in 1968, the Court opened up a major exception to this general rule. In Flast v. Cohen, the Court held that taxpayers did have standing to contest violations of the First Amendment’s Establishment Clause, despite the lack of the usually-required individualized harm. Part of the thought behind Flast, I suspect, was practical: the injury caused by an Establishment Clause violation is by its nature difficult to particularize (are you harmed more than anyone else by a creche on public land?), and if “taxpayer standing” is not enough to bring an Establishment Clause violation into Court, it seems likely that many Establishment Clause violations will remain unaddressed simply because nobody will be legally qualified to contest them.

In any event, Flast has been the law since 1968, and the Court has never called it into serious question. To the contrary, since 1968 it has routinely adjudicated Establishment Clause cases in which the plaintiffs clearly had no standing other than that conferred by Flast.

So, what happened today? The Arizona case (why is it always Arizona these days?) is about a tax credit program enacted by the state legislature. Under this program, taxpayers receive a dollar-for-dollar tax credit up to $500 for donations to “school tuition organizations,” many of which are for religious schools. The plaintiffs, who are Arizona taxpayers, filed suit, claiming that the tax credit program was not consistent with the Establishment Clause.

Today, the Supreme Court (5-4, majority opinion by Kennedy, joined by Roberts, Scalia, Thomas, and Alito) decided that the plaintiffs had no standing to bring the suit. The “reasoning” was that a targeted tax credit for tuition in religious schools does not confer standing under Flast – even though the functionally identical step of appropriating money for the same purpose unquestionably would.

Immediately, it should be apparent how ridiculous this “distinction” is. Justice Kagan said it exceptionally well, so I’ll just quote her.

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; indeed, we would think the less of our countrymen if they failed to see through this cynical proposal. And what ordinary people would appreciate, this Court’s case law also recognizes-that targeted tax breaks are often “economically and functionally indistinguishable from a direct monetary subsidy.” Rosenberger v. Rector and Visitors of Univ. of Va. , 515 U. S. 819, 859 (1995) ( Thomas, J ., concurring). Tax credits, deductions, and exemptions provided to an individual or organization have “much the same effect as a cash grant to the [recipient] of the amount of tax it would have to pay” absent the tax break. Regan v. Taxation With Representation of Wash. , 461 U. S. 540, 544 (1983) . “Our opinions,” therefore, “have long recognized … the reality that [tax expenditures] are a form of subsidy that is administered through the tax system.” Arkansas Writers’ Project, Inc. v. Ragland , 481 U. S. 221, 236 (1987) ( Scalia, J. , dissenting) (internal quotation marks omitted). Or again: Tax breaks “can be viewed as a form of government spending,” Camps Newfound/Owatonna, Inc. v. Town of Harrison , 520 U. S. 564, 589-590, n. 22 (1997) , even assuming the diverted tax funds do not pass through the public treasury. And once more: Both special tax benefits and cash grants “represen[t] a charge made upon the state,” Nyquist , 413 U. S., at 790-791 (internal quotation marks omitted); both deplete funds in the government’s coffers by transferring money to select recipients. 6 For just this reason, government budgeting rules routinely insist on calculation of tax subsidies, in addition to appropriations…. 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 vicarious ‘donors.’ ” Bob Jones Univ. v. United States , 461 U. S. 574, 591 (1983) . And again: “Every tax exemption constitutes a subsidy that affects nonqualifying taxpayers, forcing them to” bear its cost. Texas Monthly, Inc. v. Bullock , 489 U. S. 1, 14 (1989) (plurality opinion). Indeed, we have specifically compared the harm arising from a tax subsidy with that arising from a cash grant, and declared those injuries equivalent because both kinds of support deplete the public fisc. “In either case,” we stated, “the alleged injury is based on the asserted effect of the allegedly illegal activity on public revenues, to which the taxpayer contributes.” DaimlerChrysler Corp. v. Cuno , 547 U. S. 332, 344 (2006) . This taxpayer injury of course fails to establish standing in the mine-run case, whatever form the state aid takes. See, e.g., id., at 343-344; ante , at 6-10; supra, at 3. But the key is this: Whenever taxpayers have standing under Flast to challenge an appropriation, they should also have standing to contest a tax expenditure. Their access to the federal courts should not depend on which type of financial subsidy the State has offered.



That’s a pretty good argument. One would think that Kennedy would at least try to address it. But he doesn’t. Not only does he not directly rebut anything said in the dissent (he never refers to it), he also fails to cite most of the cases on which the dissent relies. That he fails to mention Bob Jones is particularly appalling, given this passage from that case:

When the Government grants exemptions or allows deductions all taxpayers are affected; the very fact of the exemption or deduction for the donor means that other taxpayers can be said to be indirect and vicarious “donors.”



That passage is 100% inconsistent with Kennedy’s opinion:

It is easy to see that tax credits and governmental expenditures can have similar economic consequences, at least for

beneficiaries whose tax liability is sufficiently large to take full advantage of the credit. Yet tax credits and governmental expenditures do not both implicate individual taxpayers in sectarian activities. A dissenter whose tax dollars are “extracted and spent” knows that he has in some small measure been made to contribute to an establishment in violation of conscience. Flast , supra, at 106. In that instance the taxpayer’s direct and particular connection with the establishment does not depend on economic speculation or political conjecture. The connection would exist even if the conscientious dissenter’s tax liability were unaffected or reduced. See DaimlerChrysler , supra , at 348-349. When the government declines to impose a tax, by contrast, there is no such connection between dissenting taxpayer and alleged establishment. Any financial injury remains speculative.



That passage, in addition to being inconsistent with Bob Jones, is utter nonsense, and turns the original reasoning of Flast on its head by apparently making actual economic injury a requirement for standing under that case – even though the whole point of Flast and of the taxpayer standing cases in general is that taxpayers do not suffer any economic injury. Suffice it to say that Kennedy is simply talking out of his ass in this opinion; further discussion by me would be redundant in light of Kagan’s excellent dissent, which to me is completely unanswerable.

So what is going on here? A couple of things, I think. First, the Fantastic Five are obviously sympathetic to government support of religious activities and organizations, as a cursory review of their respective records makes clear (though Kennedy has occasionally bucked the trend, see Lee v. Weisman), and erecting barriers to Establishment Clause cases naturally furthers that general objective. Second, Kennedy drops in a significant paean to the Tea Party:

Like contributions that lead to charitable tax deductions, contributions yielding STO tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations. Respondents’ contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence. Private bank accounts cannot be equated with the Arizona State Treasury.



In addition to being transparently fallacious (absent the tax credit program, the $500 in question would have been owed to the state, and it is the legality of that program that is the subject of the litigation), this sort of rhetoric finds a lot in common with, say, Michele Bachmann’s nascent presidential campaign. I suspect that is no coincidence. I also wonder whether this passage is an attempt to lay some groundwork for the inevitable case concerning the constitutionality of the health care law’s individual mandate. The easiest way to defend the mandate is as an exercise of the government’s power to tax (since the penalty for not carrying health insurance takes the form of a tax assessment). For reasons that I will explain in a separate post, I think today’s decision may make that argument more difficult to sustain.

Third, the sad fact is that the Obama administration advocated for precisely the result delivered by the Court today. That’s particularly interesting in light of the fact that the Obama administration’s former Solicitor General is the author of today’s dissenting opinion that trashes the analysis of her former colleagues. Team Obama clearly likes “charitable choice” programs that permit faith-based organizations to receive federal funds in some circumstances, so it’s no surprise that they would defend the Arizona program’s merits. But I am at a loss to explain why the administration would support throwing the plaintiffs out of court. The administration was not directly involved in this case and participated only by way of filing an amicus brief, so they had no obligation to weigh in on the standing question. They should have left well enough alone. This may wind up as a classic case of failing to be careful what you wish for, especially if I’m right about this case’s impact on the health care litigation.

Finally, one has to acknowledge the half-measure of intellectual honesty from Justice Scalia, who, in an opinion joined by Justice Thomas, is at least willing to come out and say that he thinks Flast should be overruled. But it’s only a half-measure, because if they really had the courage of their convictions, they would not join the Court’s opinion but rather concur only in the judgment. Scalia is almost certainly well aware that Kennedy’s opinion is indefensible. But he also knows that if he concurred only in the judgment, he would deprive the Flast opinion of its 5-vote majority, rendering it only a plurality opinion that would have far less precedential value. And, since Scalia never saw a public sponsorship of religion that he didn’t like, he is all for barring the courthouse door to challenges of this kind. So, since the opinion serves his purpose, he joins it, even though he knows it’s a load.

Overall, a depressing day for those of us who would like to believe that something other than a naked political agenda drives the Supreme Court.