WASHINGTON (BP)--The U.S. Supreme Court must further clarify the barrier between church and state in a case about an Arizona tax credit given to citizens who donate to tuition programs that provide scholarships to religious schools.

"If you placed an electronic tag to track and monitor each cent that the pay in tax, not a cent, not a fraction of a cent would go into any religious school's coffers," said Neal Katyal, attorney for the Arizona Christian School Tuition Organization, in oral arguments before the high court Nov. 3.

The Arizona program in question gives a dollar-for-dollar tax credit, up to $500 per individual, to taxpayers who donate to student tuition organizations (STO). STOs are private organizations that act as mediators between donors and students. In 2009, there were 53 STOs. Taxpayers are able to choose which STOs they wish to donate to.

Some Arizona taxpayers, though, claim this process breaches the First Amendment clause barring a government establishment of religion. The controversy stems from the fact that over half of the STOs solely give scholarships to religious schools. The two largest STOs are the Catholic Tuition Organization of the Diocese of Phoenix and the Arizona Christian School Tuition Organization. Both organizations grant scholarships to students attending religious schools.

The U.S. Ninth Circuit Court of Appeals ruled in 2009 that sections of the school-choice program violated the establishment clause.

The fundamental question in the case is whether the money donated to these STOs is government money. The state argued it is not. The private citizens are responsible for deciding which STO to donate to and the government has no part in the process, the state said. Arizona also argued the donated money, since it is applied as a tax credit, never goes through the state treasury, meaning it was never "government" money.

The opposition, however, maintained that because the money was in the form of a tax credit, technically speaking, the money given to the STOs is government money.

Many of the justices seemed to find it hard to grasp the argument that, although the money never reaches the government, it is still in essence the government's money. Associate Justice Anthony Kennedy made an analogy to a senior citizen getting a discount, yet the cashier telling him to "be careful with my money."

"I have some difficulty that any money that the government doesn't take from me is still the government's money," Kennedy said.

Associate Justice Antonin Scalia seemed to agree with Kennedy, saying, "That is 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."

There were also peripheral questions at hand. For instance, Katyal disputed the right of the taxpayers, in this case, to challenge the state's expenditures. His argument hinged on the fact that, since the dispute is not about money paid but money owed, the taxpayers did not have a right to contest the program.

"Their complaint is not that government is spending ... money that has been extracted and spent of the taxpayers," Katyal said. "Their complaint is that someone else's money is not being extracted and spent enough."

Another question was whether a STO acts as a government operation. In order to receive the credit, Arizona requires taxpayers to give the money to a STO, but it leaves the choice of which STO in the hands of the taxpayer. If the justices decide STOs operate as government agencies, then the STOs' discrimination based on religion would be unconstitutional.

The high court also discussed the difference between a tax credit and a tax deduction. The Supreme Court has ruled it is constitutional for taxpayers to be given a tax deduction for donating to charities, some of which are religious. Paul Bender, representing the taxpayers opposed to the program, argued the two are very different.

Because a deduction is applied before one pays taxes, it is constitutional, Bender told the justices. However, the tax credit implies, by adding money to a taxpayer's credit, the government is essentially giving taxpayers money to support these organizations, he said.

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

Much of the argument came down to what Associate Justice Samuel Alito called a "philosophical point" -- the idea that money not paid because of a deduction belongs to the government.

The final ruling will depend on how the justices interpret the tax credit. If it is seen as government money, the program will likely be ruled unconstitutional.

The Southern Baptist Ethics & Religious Liberty Commission (ERLC) filed a brief on behalf of Arizona and the Arizona Christian School Tuition Organization. In the brief, ERLC urged the high court to rule in favor of the state. The commission argued a ruling in favor of the opposed taxpayers "undermines rather than protects First Amendment values like governmental neutrality, private choice and free exercise ." Joining the ERLC on the brief were the National Association of Evangelicals and the Convocation of Anglicans in North America.

A ruling in the combined cases, Arizona Christian School Tuition Organization v. Winn and Garriott v. Winn, is expected before the court's adjournment next summer.

Hannah Cummings is an intern with the Washington bureau of Baptist Press.

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