Last year, New Hampshire passed an exciting new school choice law. The measure was so widely lauded that legislators overrode the governor’s veto. It is a tax credit plan that gives New Hampshire businesses a tax deduction if they donate to a school tuition organization. Thus, instead of that business’s tax money going into the state’s general fund, it would go to a tuition organization. In turn, those organizations provide vouchers to underprivileged students to attend private schools that they would otherwise be unable to afford.
These tax-credit programs have already been ruled constitutional by the United States Supreme Court in Arizona Christian School Tuition Organization. There, Arizona’s tax-credit scheme was challenged as a violation of the First Amendment. The anti-choice groups had argued that the First Amendment was violated because money that would otherwise go to the state in the form of income tax payments was instead going to private (sometime sectarian) schools. The Supreme Court rejected this argument, noting that the argument “assumes that income should be treated as government property even if it has not come into the tax collector’s hands.”
Undaunted, the same anti-choice groups have decided to take their fight to state constitutions. So, when Indiana (or Colorado) passed a statewide tax credit bill last year, the anti-choice groups filed a lawsuit arguing that it violated the Indiana Constitution. PLF got involved in that lawsuit, and we are awaiting a decision from the Indiana Supreme Court. It was sadly unsurprising then to learn that the anti-choice groups filed suit in New Hampshire arguing that the new tax credit bill violates the New Hampshire Constitution.
PLF is likely to get involved in this fight in New Hampshire as well. These lawsuits are meritless for the same reason they were meritless under the U.S. Constitution — they assume that your income is actually the government’s money. Dollars that are given to tuition organizations never reach the government. They go from a private business to a private non-profit organization. Just because the government would otherwise tax more of the business’s money if it hadn’t given to the organization, doesn’t transform its dollars into government money. And because there is no endorsement of religion by government — or any commingling of government funds with religious organizations — there is no unconstitutional action. That is true regardless of whether it is the U.S. Constitution or a state’s constitution.
* This post was edited on January 23 to reflect that the New Hampshire law provides a corporate tax credit and not an individual tax credit.