New Hampshire Business Tax Credit Scholarship Program

On August 28, 2014, the Institute for Justice successfully defended New Hampshire’s scholarship program from a constitutional challenge at the New Hampshire Supreme Court.  As a result, low-income families across the state can continue to enjoy school choice for their children.

New Hampshire’s Business Tax Credit Scholarship Program offers local businesses a partial tax credit (85 percent) for voluntary donations made to private, nonprofit scholarship organizations that fund education scholarships to low-income families. Qualifying parents may choose (1) to send their children to tuition-charging public schools in neighboring school districts, (2) to home school their children, or (3) to pay for tuition at any of the state’s secular or religious private schools.

The program was challenged in 2013 by several New Hampshire taxpayers represented by Americans United for Separation of Church and State and the American Civil Liberties Union state chapter.  Their lawsuit claimed that the program violates two of the state constitution’s religion clauses by allegedly using state funds to support religious schools.

As IJ argued, school-choice tax-credit programs do not violate state constitutional provisions that prohibit state funds from aiding religious schools for two reasons.  First, courts across the country have been unanimous that tax credits do not constitute state funds.  Second, school-choice programs aid families, not schools.  Indeed, every legal challenge to a school-choice tax-credit program has so far failed.

Fortunately, this challenge failed, as well.  Although the trial court ruled that families could not constitutionally use program scholarships to attend religious schools, the New Hampshire Supreme Court reversed.  Based on IJ’s arguments, the Court held that the plaintiffs lacked the necessary personal injury to challenge the program, and thus restored school choice to families across the state.

IJ is the nation’s leading legal advocate for educational choice and has represented parents and children in defense of school-choice programs nationwide for 25 years.