Arizona’s Scholarship Tuition Tax Credit Again Upheld by Court as Constitutional

J. Justin Wilson
J. Justin Wilson · March 24, 2005

Phoenix, AZ.—Federal District Court Judge Earl Carroll today granted the Institute for Justice Arizona Chapter’s motion and dismissed the Arizona Civil Liberties Union’s (AzCLU) frivolous legal challenge to the state’s innovative Educational Tax Credit program. The Institute represents the Arizona School Choice Trust (ASCT), a scholarship-granting organization, and parents whose children receive scholarships from ASCT.

“We are extremely gratified the District Court has once again recognized that school choice programs, such as Arizona’s Scholarship Tax Credit, are constitutional,” declared IJ-AZ Executive Director Tim Keller.

Despite prior rulings from both the Arizona Supreme Court and the U.S. Supreme Court that school choice programs meet federal constitutional requirements, the AzCLU in the federal lawsuit dismissed today had contended that the scholarship tax credit violates the First Amendment’s Establishment Clause. The District Court, while granting the Institute’s motion to dismiss, also denied as moot motions filed by the Defendant State of Arizona and the Defendant-Intervenor Arizona Christian School Tuition Organization.

The ruling comes at a crucial time because the Arizona Legislature is considering multiple bills involving the expansion of the tax credit, including proposals to create a corporate tax credit and to eliminate the marriage penalty. Currently, individual taxpayers may receive a tax credit up to $500 for donations made to a scholarship tuition organization such as ASCT, but a married couple may only claim a credit of $625. The Legislature is also considering several additional school choice measures involving school vouchers.

“Arizona’s Tuition Scholarship Tax Credit provides thousands of Arizona children the opportunity for a better education, but there are thousands more eager families on waiting lists,” said Institute for Justice Staff Attorney Jennifer Barnett. “With the District Court’s affirmation that there is no First Amendment obstacle to school choice in Arizona, policy makers should seize the moment to expand education opportunities for all of Arizona’s schoolchildren.”

“The time has come for opponents of school choice to stop filing baseless legal actions,” Keller said. “Groups such as the AzCLU and the teachers’ unions should join forces with those of us working toward meaningful education reform or step aside and let the work of improving public education continue unimpeded.”

In 1999, the Arizona Supreme Court rejected a similar challenge under the Arizona Constitution, in a case also litigated by the Institute for Justice. In addition, IJ successfully defended tax credits in Illinois and vouchers in Cleveland and Milwaukee. IJ is currently defending Florida’s groundbreaking Opportunity Scholarships program.