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Home » Vouchers » Court Case » Does the court argument that tax credit funded vouchers are private money pass the straight face test?




Strafford Superior Court judge John Lewis brushed aside the peripheral arguments in yesterday’s hearing on the constitutionality of the New Hampshire education tax credit program.  (Background on the case is collected here.)

Judge Lewis told the attorneys to focus on the heart of the matter: on the face of it, the tax credit program seems to fund religious schools with tax money, so tell me why it isn’t really tax money.  (See the great coverage in the Portsmouth Herald, Union Leader, the Concord Monitor and NHPR.)

A tax credit “scheme,” as the judge called it at one point, involves an inherently complex flow of money (I describe the NH process here).  The goal of the whole exercise is to enable proponents to make the case that by the time some of the money might just happen to get to a religious school, private citizens have made so many obviously legitimate private choices that the court must consider those choices protected by the US Constitution.  Advocates for the law, the “defendants” in this case, spent most of their two hours making that case.

Boiled down, their basic logic was that, first, the business makes a decision to donate its own private money to the scholarship organization, another private, tax exempt nonprofit organization.  The scholarship organization chooses recipients according to its own criteria.  Those parents make a private, constitutionally protected choice in selecting a school.  And, certainly, the attorneys said yesterday, if the court were to tell those parents they could not select a religious school, that would be discriminatory and violate the federal Constitution.

Deputy Attorney General Richard Head put it this way, quoted in the Union Leader, “What we have in the law before you is a private business making a decision it is going to donate money to a scholarship organization. There is no governmental involvement, except we will give you a tax credit for that decision,” Head said.  Best I could tell, he said that with a straight face.  But let’s look at the real life process.

What actually happens is that, before making the donation, the business asks the Department of Revenue Administration for an allocation of the tax credits the State has appropriated and set aside for this program.  The State has written rules for this process just as it would for any other expenditure of state funds.  If the business gets no commitment from the State to allow it to take most of the donation off its tax bill, the business makes no donation.

One of the State’s rules is that the business must make that donation to a scholarship organization within 60 days.  Sure, voucher proponents can assert that this is a voluntary donation of private money – but the business has made that donation only after entering what is essentially a contract with the State saying that if all of the State’s rules are followed, the State will repay the business for that donation, almost dollar-for-dollar.

But that’s just the beginning.

The scholarship organization essentially has a contract with the State as well.  They must select students from certain categories (so many from public schools, so many qualified for free and reduced lunch).  The amounts of the awards are constrained in various ways.  The time schedule is specified.  The scholarship organizations then report the results to the State.

The State would have no reason to do this, and no opportunity, if the money were actually private.

Then you get to the decisions made by the parents.  We surely would not presume to constrain the parents’ choice of schools, would we?  But what about how the parents themselves are selected?  What if the scholarship organization chooses to market the tax credit funded vouchers only, or primarily, to parents who want to send their children to religious schools?

This is what has happened in New Hampshire.  The first-established scholarship organization, NEO, has worked heavily with religious schools and the results show in their numbers.  A small fraction of NEO’s applicants come from public schools or want to go an out-of-district public school.  The vast majority currently attend religious schools and want to use the voucher to attend that same school.   The second scholarship organization, the Giving and Going Alliance, says that it is exclusively for religious schools, possibly as few as two specific schools.

Now look back at that business’s decision to donate.  The business clearly has the opportunity to make a state-subsidized donation that will, with certainty, go to parents who will choose a religious school.

The program has now come full circle.  The religious schools who lobbied for the voucher tax credit are the primary beneficiaries, as they are in all other states with similar programs.  This is not a result of any specific language in the law.  It is the practical result from the dominance of religious schools in the State (out of 114 private schools in NH, 71 are religious), their low tuitions and their aggressive organizing.

All of which would be fine if these were actually private donations reflecting private decisions.  But it’s pretty hard to make the case that, when the State has appropriated millions of dollars for this program and governs it with contracts, rules and reports, this is actually private money.  But for these funds raised by state taxes, the program would obviously not exist.

Read Attorney Head’s statement again and see if you think it passes the straight face test.  That’s why we feel pretty good about our prospects in court.


  1. George Manos says:

    It is a straightforward argument, the Constitution prohibits state money to go to religious schools.all the sophistical posturing cannot successfully obfuscate this fact.

    • Bill Duncan says:

      I think post-secondary education – not mandated or geographically tied – is a whole different deal. If the unaccredited creationist schools that would get NH tax credit funded tuition subsidies were like Notre Dame, it’d be a different matter. But when creationist belief is integrated into every lesson, every day, then the State’s taxpayers end up paying for a form of instruction they do not buy into.

  2. Greg Hill says:

    Then George, how do you propose we continue to allow real estate tax exemptions to churches and/or religious schools? Take a look at the original outline of Maggie Hassan’s post secondary scholarship program contained in this budget. That was 4 million dollars set aside from government coffers to go to students attending any NH college or university. How would that work under your “straightforward argument”? Lots and lots of examples.

  3. The tax exemption is not a subsidy — no state money passes to the institution for its support. It merely avoids imposition of tax, and thereby any opportunity for control, pressure or influence that would render the state suspect of interfering in religion. The exemption reinforces the separation of church and state; the voucher law undermines it by supplying state money to support religious endeavor. John R. White, Wolfeboro

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