Edward R. Shaoul
The United States Supreme Court’s decision in Flast v. Cohen has been a source of controversy in American jurisprudence. Over several decades, courts and commentators have wrestled with the meaning, scope, and historical underpinnings of the Flast exception to the general rule against taxpayer standing in Establishment Clause cases. In Flast, the Court ruled that taxpayers could demonstrate standing when (1) their suit challenged congressional taxing and spending authority, as opposed to regulatory expenditures, and (2) their claim alleged a specific constitutional infringement. The Court recently reconsidered Flast’s exception in Arizona Christian School Tuition Organization v. Winn.
In 1997, the Arizona legislature passed a law granting state income tax credits to Arizona taxpayers who donate to school tuition organizations (“STOs”). STOs, in turn, use these charitable contributions to provide tuition grants or scholarships to students attending qualified private schools, which, in many cases, are religious. Arizona taxpayers filed suit in federal court asserting that the statute violated the Establishment Clause as applied. Because many STOs restrict the availability of scholarships to religious schools, the claimants alleged that the tax credit program deprived parents of a genuine choice between scholarships to private secular schools and religious ones. The Winn Court held that the Arizona taxpayers lacked Article III standing under Flast because the taxpayers challenged a tax credit and not a government expenditure. The Court had never before relied on this tax credit distinction to dismiss a claim for lack of standing.
Although novel to standing doctrine, the Court’s distinction between a tax credit and a government expenditure does not violate precedent. Even though the Court had previously reached a decision on the merits of Establishment Clause cases involving tax credits without questioning the claimants’ standing, those cases did not mention standing and thus did not stand for the proposition that no jurisdictional defect existed. Courts would indeed risk grave error if they relied on or assumed unstated rules of law from prior cases.
The distinction between a tax credit and a government expenditure in Winn has merit for several reasons. First, the tax credit distinction derives from the very text of Flast, which requires a taxpayer to challenge not just taxing authority—but congressional taxing and spending power—to be eligible for standing. Because a tax credit invokes taxing and not spending power, it does not fall within the Flast exception. Second, the tax credit distinction avoids speculative decisions. Whereas an affirmative tax on targeted constituents may satisfy the Article III and particularized injury requirements embodied in standing doctrine, specific injury from a tax credit requires courts to assume that legislators will subsequently increase plaintiffs’ tax bills to offset the supposed deficit caused by such tax credit. Third, the distinction between a tax credit and a government expenditure preserves judicial economy. A universal rule to provide standing for all claims challenging a tax credit could have resulted in a significant expansion of Establishment Clause plaintiffs. The Court’s decision in Winn indeed averts that outcome.
The juxtaposition of Winn’s tax credit distinction under the Establishment Clause and the subsidy exception under the dormant Commerce Clause arguably reveals further reasoning for the Court’s decision in Winn. A claimant may establish standing under the dormant Commerce Clause to challenge a state tax discriminating against out-of-state parties but not a similarly discriminatory state subsidy from general tax funds. Unlike the newly shielded status in Winn of a tax credit under the Establishment Clause, the analogous discriminatory tax exemption or rebate receives no such favorable treatment under the dormant Commerce Clause. Because the dormant Commerce Clause generally aims to prevent the discriminatory tax policy at issue—which goes to the heart of interstate commerce—the Court might be more generous about taxpayer standing in that context and thus unwilling to adopt the tax credit distinction. Purported violations of the Establishment Clause, however, can take many forms beyond just discriminatory tax policy. Therefore, the Court might find that plaintiffs challenging a tax credit under the Establishment Clause do not require as much latitude to bring a claim as those challenging a tax credit under the dormant Commerce Clause.
Winn highlighted the division between the Court’s conservative and liberal blocs, which denied and unsuccessfully supported standing, respectively. Critics of Article III standing doctrine maintain that the Court’s strict version of standing emerged in reaction to public interest litigation in the late 1970s. In this current era of frequent litigation, the Court’s strict version of taxpayer standing under the Establishment Clause appears to be alive and well.
For further explanation and analysis, see Edward R. Shaoul, Comment, Arizona Christian School Tuition Organization v. Winn: Reconsidering Flast’s Exception to the Rule Against Taxpayer Standing and Establishing the Tax Credit Distinction, 89 Denv. U. L. Rev. (forthcoming 2012).
 J.D. Candidate, 2013, University of Denver Sturm College of Law.