This morning, the New Hampshire Supreme Court upheld the state’s landmark Education Tax Credit Program. The Program allows businesses to claim a tax credit on their tax bill for donations to tuition scholarship organizations approved by the state. Those organizations, in turn, provide scholarships to low-income students to attend public or private schools of their choice. The private tuition organizations can award scholarships to either secular or sectarian schools. Plaintiffs, represented by the ACLU and Americans United for Separation of Church and State, argued that the Program violated the New Hampshire Constitution, because private organizations could give scholarships to religious schools. The trial court agreed, and struck down the Program. As a result of the trial court’s ruling, businesses were forced to take back money that they had donated to give kids education scholarships.
The New Hampshire Supreme Court did not reach the merits of the plaintiffs’ constitutional claims. It ruled that the plaintiffs lacked standing to challenge the program, because they were not injured by the tax credits given to businesses. In ruling that the plaintiffs did not have standing, the Court upheld the Program.
The plaintiffs tried to rely on a New Hampshire statute enacted in 2012 that gave taxpayers standing to challenge any grievance it had with New Hampshire laws, whether or not they were directly affected. The Court ruled that the taxpayer standing statute was unconstitutional, because it permitted the Court to issue advisory opinions to private individuals whose constitutional rights were not impacted. Because the standing statute was unconstitutional, and because the plaintiffs could not establish they were injured under traditional standing rules, the Court ordered that the plaintiffs’ case be dismissed.
This ruling is very similar to the United States Supreme Court’s ruling in Arizona Christian School Tuition Organization v. Winn. In that case, the Supreme Court ruled that plaintiffs do not have standing to challenge tax credits that allow businesses and individuals to claim tax breaks, because tax breaks do not constitute “state funds.” In a very powerful passage, the Court wrote that a “contrary position assumes that income should be treated as government property even if it has not come into the tax collector’s hands.”
While it did not rely on Winn, the New Hampshire Supreme Court followed the Supreme Court’s reasoning. When businesses receive tax credits for voluntary donations, they are not spending the state’s money. The funds never arrive in New Hampshire state coffers. Because businesses are making private donations, the plaintiffs cannot allege that tax money is being spent for religious purposes.
This is an important victory for school choice. In this case, PLF represented the prime sponsors and drafters of the Education Tax Credit Program. These individuals were moved by the idea that parents should have meaningful choice in where their children are educated. And today, PLF joins our co-amici in celebrating the New Hampshire Supreme Court’s decision. The future is brighter for New Hampshire kids.