Arizona Christian School Tuition Organization v. Winn; Garriott v. Winn


1. Do Arizona taxpayers have a sufficiently personal injury to file a lawsuit against Section 1098, which authorizes a tax credit for voluntary donations to student tuition organizations?

2. Although Section 1089 is neutral on its face, is it nonetheless unconstitutional as applied if taxpayers have used it as a means of providing funding primarily to religious schools?

Oral argument: 
November 3, 2010

Arizona taxpayers brought claims alleging that Arizona’s Tuition Tax Credit violates the Establishment Clause of the First Amendment. The Tax Credit gives taxpayers a reduction in their tax liabilities for their donations to school tuition organizations. These organizations may give scholarships to students of particular faiths to attend certain religious schools. The taxpayers contend that they have the right to sue the government and these organizations for two reasons: the state loses over $50 million in tax revenue each year because the money that the organizations receive would otherwise be state tax revenue and the Tuition Tax Credit promotes religion. The petitioners claim that the taxpayers do not assert a sufficiently personal injury to initiate a lawsuit, and they claim that program does not violate the Establishment Clause because individual taxpayers, not the government, choose where to donate their money. The Supreme Court will decide whether the taxpayers have the right to sue and if so, whether Arizona’s Tax Credit violates the Establishment Clause.

Questions as Framed for the Court by the Parties 

Questions Presented in Arizona Christian School Tuition Org. v. Winn

1. Do Respondents lack taxpayer standing because they do not allege, nor can they, that the Arizona Tuition Tax Credit involves the expenditure or appropriation of state funds?

2. Is the Respondents' alleged injury-which is solely based on the theory that Arizona's tax credit reduces the state's revenue-too speculative to confer taxpayer standing, especially when considering that the credit reduces the state's financial burden for providing public education and is likely the catalyst for new sources of state income?

3. Given that the Arizona Supreme Court has authoritatively determined, under state law, that the money donated to tuition granting organizations under Arizona's tax credit is private, not state, money, can the Respondents establish taxpayer standing to challenge the decisions of private taxpayers as to where they donate their private money?

Question Presented in Garriott, Director, Arizona Dept. of Revenue v. Winn

Under Arizona Revised Statutes (A.R.S.) Section 43-1089, individuals who contribute money to school tuition organizations (STOs) that provide scholarships to students wishing to attend private schools are entitled to an income tax credit. Respondents alleged that Section 1089's neutral language and the Legislature's stated secular purpose for enacting it were a pretense and that the tuition tax credit program had the primary effect of advancing religion because a majority of taxpayers who contributed to STOs chose to contribute to STOs that awarded scholarships to students attending religious schools.

The question presented is the following:
Did the court of appeals err in holding that if most taxpayers who contribute to STOs contribute to STOs that award scholarships to students attending religious schools, Section 1089 has the purpose and effect of advancing religion in violation of the Establishment Clause even though Section 1089 is a neutral program of private choice on its face and the State does nothing to influence the taxpayers or the STOs' choice?


In 1997, the Arizona Legislature approved the Arizona Tuition Tax Credit, Section 1089 of which permits individuals to claim income tax credit in return for contributions to school tuition organizations ("STOs"). Tax credits permit taxpayers to decrease their income tax liability in accordance with the amount contributed to STOs. STOs, as established by Arizona law, are charitable groups that are required to spend at least ninety percent of their funds on scholarships and grants for students to attend the private school of their choice. Several STOs, including the three largest in Arizona, require that their scholarships be used only at religious schools or schools with a particular denomination.

Before Section 1089 went into effect, the Arizona Supreme Court determined in a separate case that the provision did not, as written, violate the Establishment Clause of the First Amendment.

Kathleen Winn and other Arizona taxpayers (collectively "Winn") initiated a suit in 2000 in the United States District Court for the District of Arizona against the Director of the Arizona Department of Revenue, alleging that Section 1089, as applied, violates the Establishment Clause. Winn sought an injunction to halt the STO program and a return of funds already collected by the STOs but not yet spent. The district court dismissed the case, but on appeal, the Ninth Circuit reversed the district court’s dismissal and remanded the case. The Ninth Circuit reasoned that the remand was not barred by the Tax Injunction Act, which aims to prevent district court interference with a state’s “‘assessment, levy, or collection’ of state taxes where an efficient remedy is available in state court.” The Ninth Circuit also held that because the STO contribution program comprises only a small part of the state tax code and does not significantly affect the functioning of other tax provisions, no potential harm exists that would make federal court review of Section 1089 overly intrusive on Arizona’s sovereignty.

On remand, the district court dismissed the case for failure to state a claim. On April 21, 2009, the Ninth Circuit again reversed and remanded, finding that Winn had made sufficient claims to allege that Section 1089 involved improper government endorsement of religion. The United States Supreme Court granted certiorari on May 24, 2010.

In 2010, the Arizona legislature passed two bills amending Section 1089. The changes include 1) a requirement that STOs obtain certification from the Department of Revenue prior to participating in the program; 2) a provision stating that contributions can be made at the time a taxpayer files a tax return; 3) a provision stating that the amount taxpayers can use as a credit is now linked to the consumer price index; 4) increased reporting requirements of STO financial information and audits to the Department of Revenue; and 5) a requirement that STOs consider the financial needs of student applicants.


Standing is a required component of federal jurisdiction. In order to bring a suit, the plaintiff must have standing by sufficiently alleging an injury resulting from the defendant’s unlawful conduct, and the requested relief must likely be able to fix that injury. . A taxpayer cannot challenge illegal state or federal spending simply because she is a taxpayer; the taxpayer's individual interest in the Treasury is too “minute and indeterminable.” The Supreme Court recognized a limited exception to this rule in Flast v. Cohen. Under Flast, taxpayers have standing without major personal injury if they establish a logical connection between their status as taxpayer and the legislative enactment at issue, and they satisfactorily allege that the government’s use of its taxing and spending power exceeds specific constitutional limitations, such as the Establishment Clause.

The Ninth Circuit found that Winn, by alleging that Arizona violated the Establishment Clause by using the tax and spending power to advance religion, had established a logical connection between her status as a taxpayer and Section 1089. . In its decision, the Ninth Circuit stated that in Establishment Clause cases it is sufficient that a plaintiff’s injury is the “extraction and spending of tax money in aid of religion,” and the program need not affect the plaintiff specifically.

Petitioner Arizona Christian School Tuition Organization (“ACSTO”) claims that Winn must allege a specific, concrete injury in order to have standing. The ACSTO also alleges that Winn has no specific injury because Winn did not allege that the state spent Winn’s personal tax dollars to support religion. Winn disagrees, explaining that the Arizona Department of Revenue’s 2009 Report states that tax credits are lost state revenue and “when enacted into law…reduc[e] the amount of revenue available for state (as well as local) programs. In effect, the fiscal impact of implementing a tax expenditure would be similar to a direct expenditure of state funds.”

The ACSTO further asserts that Winn cannot prove there is a logical link between herself and Section 1089 because Section 1089 is a voluntary charity program. . Under Section 1089, only those who contribute to religious-based scholarship programs will have their funds used for scholarships to religious schools. Taxpayers may choose to contribute to secular school scholarships or not to contribute at all. Winn admits she has no standing if Section 1089 is deemed to be a voluntary charity program, but she argues that the Tuition Tax Credit should be considered a government spending program instead. Winn asserts that charity is giving something that is yours to give, whereas under Section 1089, the taxpayers are paying state income taxes and thus must give the money to the state or to a scholarship program. In Winn’s view, the STOs are “entirely funded by state income-tax revenues.” The ACSTO argues that the impact on state revenue is too speculative because, by increasing the number of students in private schools through scholarships, the public schools have fewer students and correspondingly hire fewer teachers and build fewer new schools or buildings. The ACSTO asserts the Winn cannot prove that the Tuition Tax Credit program actually decreases state revenues because savings may result by sending more children to private school, nor can she prove that the taxpayers’ tax burden increased because of the Tuition Tax Credit.

Establishment Clause

Under the First and Fourteenth Amendments, states may not enact laws that have the effect or purpose of inhibiting or advancing religion. In Zelman, the Court found constitutional a state program that gave poor, inner-city students tuition vouchers which they could use at any private school they chose. The Court decided that the program did not violate the Establishment Clause because the state distributed aid on neutral grounds, without regard to religion, and that parents decided whether to send their children to sectarian schools.

Winn asserts that Section 1089 is unlike the program in Zelman because under Section 1089, scholarship recipients need not be disadvantaged, and scholarships may vary in amount without regard to need. The student tuition organizations granting the scholarships may also require the parent or child belong to a certain religion or limit scholarships to a group of specific schools, thus constraining the students’ and parents’ choice. Winn asserts that while Section 1089 uses neutral language, in practice more than half of the scholarships are given to children on the basis of their religion. Petitioner Gale Garriott, current Director of the Arizona Department of Revenue, emphasizes that several private choices must be made before a religious school obtains funding and that these choices render Section 1089 valid under the Establishment Clause. According to Garriott, a private group must decide to create a religion-based STO, and taxpayers must choose to donate to the STO.

When evaluating an Establishment Clause claim, courts also consider whether a statute was enacted for a secular purpose by looking at the statute’s language and the legislative history. Garriott emphasizes that the legislative history only states secular purposes, such as providing education options and financial assistance for all parents. Winn claims that this purpose may be a sham because STOs were not required to give scholarships to students needing financial assistance, though Section 1089 now requires STOs to consider financial need.

Changes to State Law

After the Court granted certiorari, Arizona changed Section 1089 in several ways. The amended statute requires STOs to apply for certification from the Department of Revenue by establishing that its sole purpose is to receive taxpayers’ contribution for the purpose of income tax credits. The STOs must annually report the contributions received and the amount of the scholarships given, and the STOs must now consider the financial need of the applicants and report the amount of scholarships given to needy families. In order to ensure compliance, STOs must provide an annual independently-conducted audit or financial review.

Winn argues that these changes to state law strengthen her argument because the state’s increased enforcement, oversight, and certification of STOs support the proposition that STOs are public rather than private charitable organizations. The ACSTO characterizes the changes as “irrelevant” because they do not change how the program fundamentally operates. .


The Supreme Court will determine whether Kathleen Winn and other taxpayers are entitled to taxpayer standing and whether Section 1089 of Arizona's Tuition Tax Credit violates the Establishment Clause.

Petitioner Gale Garriott, current Director of the Arizona Department of Revenue, sought review of the Ninth Circuit's finding that Winn has standing to challenge Section 1089.The United States agrees that Winn and the other taxpayers do not have standing because they have not “suffered a concrete injury that is fairly traceable to the defendant’s allegedly illegal conduct and that would be redressed by the requested relief.” The United States warns that allowing taxpayers to sue for “generalized grievances” that allege “small and conjectural” injuries resulting from the government’s use of taxpayer money would provide federal courts with overly-broad power to supervise state and federal taxation and spending programs.The Rutherford Institute similarly warns against a disregard for separation of powers principles, stating that when taxpayers generally object to a law, they ought to seek relief through the political process, not the courts.

Winn counters that taxpayers have standing to challenge the constitutionality of the government's tax-expenditure programs, and that this standing is not refuted by the fact that private taxpayers, not the government, decide which school tuition organizations (“STOs”) they wish to contribute money to in exchange for an income tax credit.Americans United for Separation of Church and State ("AUSCS") agrees, arguing that for taxpayer standing purposes, tax expenditures are no different than government cash grants.By distinguishing between the two, warns AUSCS, the courts risk creating a loophole whereby states may prevent taxpayer Establishment Clause challenges by simply funding their religious initiatives through taxes rather than through grants.AUSCS claims that providing incentives for using tax credits instead of cash grants is additionally dangerous because tax expenditures are prone to less government and public scrutiny than are cash grants.

The Cato Institute warns that holding the STO contribution system unconstitutional might jeopardize similar programs in effect across the country.According to the CATO Institute, Section 1098 is essential to the ability of parents to choose amongst a variety of educational options to financially support.Additionally, the Cato Institute claims that the diversity of STOs provides parents with options when seeking funds for their children.The Rutherford Institute claims that the fact that much of the STO funding is directed to religious schools is not disproportionate to the genuine educational preferences of citizens.Thus, according to the Rutherford Institute, the fact that religious schools receive funding is merely testament to the prevalence of religious private schools nationwide.

The National School Boards Association ("NSBA") disagrees, stating that the program does not in fact provide additional options for students from needy families, who are the intended beneficiaries of the programRather, the NSBA claims that only a small minority of the STOs consider financial need when providing funds to students. According to the NSBA, because the scholarships are often too small to cover the full costs of private schools, even students from low-income backgrounds who might receive scholarship money may not have the opportunity to attend a private school.The NSBA additionally states that in order for there to be a genuine choice, parents must have the option to use the funds to support their child's public school education as well.

The NSBA additionally contends that the STO contribution program negatively affects Arizona's public education system.The NSBA claims that as money is put towards STOs, tax revenues decrease, and the state has concurrently cut public school funding.At the same time, says the NSBA, the number of students who leave public schools for private schools is insufficient to balance the costs of the STO program, thus threatening the quality of public school education.


The Supreme Court will decide whether the Arizona taxpayers have standing to challenge Arizona’s Tuition Tax Credit for violating the Establishment Clause. This case could clarify the Court’s Establishment Clause exception to the rule that taxpayers do not have standing to challenge state or federal tax regimes. The Court may also decide whether the Arizona Tuition Tax Credit, though neutral on its face, violates the Establishment Clause. This decision could impact federal oversight of state tax programs and the ways in which states encourage attendance at private schools.

Edited by 


Additional Resources 

· Wex: Establishment Clause

· Annotated U.S. Constitution: First Amendment