B

Our taxpayer standing cases have declined to distinguish between appropriations and tax expenditures for a simple reason: Here, as in many contexts, the distinction is one in search of a difference. To begin to see why, consider an example far afield from Flast and, indeed, from religion. Imagine that the Federal Government decides it should pay hundreds of billions of dollars to insolvent banks in the midst of a financial crisis. Suppose, too, that many millions of taxpayers oppose this bailout on the ground (whether right or wrong is immaterial) that it uses their hard-earned money to reward irresponsible business behavior. In the face of this hostility, some Members of Congress make the following proposal: Rather than give the money to banks via appropriations, the Government will allow banks to subtract the exact same amount from the tax bill they would otherwise have to pay to the U. S. Treasury. Would this proposal calm the furor? Or would most taxpayers respond by saying that a subsidy is a subsidy (or a bailout is a bailout), whether accomplished by the one means or by the other? Surely the latter; indeed, we would think the less of our countrymen if they failed to see through this cynical proposal:chanrobles.com-red

And what ordinary people would appreciate, this Court’s case law also recognizes—that targeted tax breaks are often “economically and functionally indistinguishable from a direct monetary subsidy.” Rosenberger v. Rector and Visitors of Univ. of Va., 515 U. S. 819, 859 (1995) (Thomas, J., concurring). Tax credits, deductions, and exemptions provided to an individual or organization have “much the same effect as a cash grant to the [recipient] of the amount of tax it would have to pay” absent the tax break. Regan v. Taxation With Representation of Wash., 461 U. S. 540, 544 (1983). “Our opinions,” therefore, “have long recognized … the reality that [tax expenditures] are a form of subsidy that is administered through the tax system.” Arkansas Writers’ Project, Inc. v. Ragland, 481 U. S. 221, 236 (1987) (Scalia, J., dissenting) (internal quotation marks omitted). Or again: Tax breaks “can be viewed as a form of government spending,” Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U. S. 564, 589–590, n. 22 (1997), even assuming the diverted tax funds do not pass through the public treasury. And once more: Both special tax benefits and cash grants “represen[t] a charge made upon the state,” Nyquist, 413 U. S., at 790–791 (internal quotation marks omitted); both deplete funds in the government’s coffers by transferring money to select recipients.[Footnote 6]

For just this reason, government budgeting rules routinely insist on calculation of tax subsidies, in addition to appropriations. The President must provide information on the estimated cost of tax expenditures in the budget he submits to Congress each year. See 31 U. S. C. §1105(a)(16); n. 1, supra. Similarly, congressional budget committees must report to all Members on the level of tax expenditures in the federal budget. See 2 U. S. C. §632(e)(2)(E). Many States—including Arizona—likewise compute the impact of targeted tax breaks on the public treasury, in recognition that these measures are just spending under a different name, see n. 1, supra. The Arizona Department of Revenue must issue an annual report “detailing the approximate costs in lost revenue for all state tax expenditures.” Ariz. Rev. Stat. Ann. §42–1005(A)(4) (West 2006). The most recent report notes the significance of this accounting in the budget process. It explains that “the fiscal impact of implementing” targeted tax breaks, including the STO credit challenged here, is “similar to a direct expenditure of state funds.” Arizona Dept. of Revenue, Revenue Impact of Arizona’s Tax Expenditures FY 2009/10, p. 1 (preliminary Nov. 15, 2010); see also Surrey, Tax Incentives as a Device for Implementing Government Policy: A Comparison with Direct Government Expenditures, 83 Harv. L. Rev. 705, 717 (1970) (“A dollar is a dollar—both for the person who receives it and the government that pays it, whether the dollar comes with a tax credit label or a direct expenditure label”):chanrobles.com-red

And because these financing mechanisms result in the same bottom line, taxpayers challenging them can allege the same harm. Our prior cases have often recognized the cost that targeted tax breaks impose on taxpayers generally. “When the Government grants exemptions or allows deductions” to some, we have observed, “all taxpayers are affected; the very fact of the exemption or deduction … means that other taxpayers can be said to be indirect and vicarious ‘donors.’ ” Bob Jones Univ. v. United States, 461 U. S. 574, 591 (1983). And again: “Every tax exemption constitutes a subsidy that affects nonqualifying taxpayers, forcing them to” bear its cost. Texas Monthly, Inc. v. Bullock, 489 U. S. 1, 14 (1989) (plurality opinion). Indeed, we have specifically compared the harm arising from a tax subsidy with that arising from a cash grant, and declared those injuries equivalent because both kinds of support deplete the public fisc. “In either case,” we stated, “the alleged injury is based on the asserted effect of the allegedly illegal activity on public revenues, to which the taxpayer contributes.” DaimlerChrysler Corp. v. Cuno, 547 U. S. 332 , 344 (2006). This taxpayer injury of course fails to establish standing in the mine-run case, whatever form the state aid takes. See, e.g., id., at 343–344; ante, at 6–10; supra, at 3. But the key is this: Whenever taxpayers have standing under Flast to challenge an appropriation, they should also have standing to contest a tax expenditure. Their access to the federal courts should not depend on which type of financial subsidy the State has offered:chanrobles.com-red

Consider some further examples of the point, but this time concerning state funding of religion. Suppose a State desires to reward Jews—by, say, $500 per year—for their religious devotion. Should the nature of taxpayers’ concern vary if the State allows Jews to claim the aid on their tax returns, in lieu of receiving an annual stipend? Or assume a State wishes to subsidize the ownership of crucifixes. It could purchase the religious symbols in bulk and distribute them to all takers. Or it could mail a reimbursement check to any individual who buys her own and submits a receipt for the purchase. Or it could authorize that person to claim a tax credit equal to the price she paid. Now, really—do taxpayers have less reason to complain if the State selects the last of these three options? The Court today says they do, but that is wrong. The effect of each form of subsidy is the same, on the public fisc and on those who contribute to it. Regardless of which mechanism the State uses, taxpayers have an identical stake in ensuring that the State’s exercise of its taxing and spending power complies with the Constitution.[Footnote 7]

Here, the mechanism Arizona has selected is a dollar-for-dollar tax credit to aid school tuition organizations. Each year come April 15, the State tells Arizonans: Either pay the full amount of your tax liability to the State, or subtract up to $500 from your tax bill by contributing that sum to an STO. See Winn I, 542 U. S., at 95. To claim the credit, an individual makes a notation on her tax return and splits her tax payment into two checks, one made out to the State and the other to the STO. As this Court recognized in Winn I, the STO payment is therefore “costless” to the individual, ibid.; it comes out of what she otherwise would be legally obligated to pay the State—hence, out of public resources. And STOs capitalize on this aspect of the tax credit for all it is worth—which is quite a lot. To drum up support, STOs highlight that “donations” are made not with an individual’s own, but with other people’s—i.e., taxpayers’—money. One STO advertises that “[w]ith Arizona’s scholarship tax credit, you can send children to our community’s [religious] day schools and it won’t cost you a dime!” Brief for Respondents 13 (internal quotation marks and emphasis omitted). Another urges potential donors to “imagine giving [to charity] with someone else’s money… . Stop Imagining, thanks to Arizona tax laws you can!” Id., at 14 (internal quotation marks and emphasis omitted). And so Arizonans do just that: It is, after all, good fun to spend other people’s money. By the State’s reckoning, from 1998 to 2008 the credit cost Arizona almost $350 million in redirected tax revenue.[Footnote 8]

The Plaintiffs contend that this expenditure violates the Establishment Clause. If the legislature had appropriated these monies for STOs, the Plaintiffs would have standing, beyond any dispute, to argue the merits of their claim in federal court. But the Plaintiffs have no such recourse, the Court today holds, because Arizona funds STOs through a tax credit rather than a cash grant. No less than in the hypothetical examples offered above, here too form prevails over substance, and differences that make no difference determine access to the Judiciary. And the casualty is a historic and vital method of enforcing the Constitution’s guarantee of religious neutrality:chanrobles.com-red

C

The majority offers just one reason to distinguish appropriations and tax expenditures: A taxpayer experiences injury, the Court asserts, only when the government “extracts and spends” her very own tax dollars to aid religion. Ante, at 15 (internal quotation marks and alterations omitted). In other words, a taxpayer suffers legally cognizable harm if but only if her particular tax dollars wind up in a religious organization’s coffers. See also Tr. of Oral Arg. 4 (Solicitor General proposing that the “key point” was: “If you placed an electronic tag to track and monitor each cent that the [Plaintiffs] pay in tax,” none goes to religious STOs). And no taxpayer can make this showing, the Court concludes, if the government subsidizes religion through tax credits, deductions, or exemptions (rather than through appropriations).[Footnote 9]

The majority purports to rely on Flast to support this new “extraction” requirement. It plucks the three words “extrac[t] and spen[d]” from the midst of the Flast opinion, and suggests that they severely constrict the decision’s scope. Ante, at 15 (quoting 392 U. S., at 106). And it notes that Flast partly relied on James Madison’s famed argument in the Memorial and Remonstrance Against Religious Assessments: “ ‘[T]he same authority which can force a citizen to contribute three pence only of his property for the support of any one establishment, may force him to conform to any other establishment in all cases whatsoever.’ ” 392 U. S., at 103 (quoting 2 Writings of James Madison 183, 186 (G. Hunt ed. 1901)); see ante, at 12–14. And that is all the majority can come up with:chanrobles.com-red

But as indicated earlier, everything of import in Flast cuts against the majority’s position. Here is how Flast stated its holding: “[W]e hold that a taxpayer will have standing consistent with Article III to invoke federal judicial power when he alleges that congressional action under the taxing and spending clause is in derogation of” the Establishment Clause. 392 U. S., at 105–106. Nothing in that straightforward sentence supports the idea that a taxpayer can challenge only legislative action that disburses his particular contribution to the state treasury. And here is how Flast primarily justified its holding: “[O]ne of the specific evils feared by those who drafted the Establishment Clause and fought for its adoption was that the taxing and spending power would be used to favor one religion over another or to support religion in general.” Id., at 103. That evil arises even if the specific dollars that the government uses do not come from citizens who object to the preference. Likewise, the two-part nexus test, which is the heart of Flast’s doctrinal analysis, contains no hint of an extraction requirement. See supra, at 4. And finally, James Madison provides no comfort to today’s majority. He referred to “three pence” exactly because it was, even in 1785, a meaningless sum of money; then, as today, the core injury of a religious establishment had naught to do with any given individual’s out-of-pocket loss. See infra, at 21–23 (further discussing Madison’s views). So the majority is left with nothing, save for three words Flast used to describe the particular facts in that case: In not a single non-trivial respect could the Flast Court recognize its handiwork in the majority’s depiction:chanrobles.com-red

The injury to taxpayers that Flast perceived arose whenever the legislature used its taxing-and-spending power to channel tax dollars to religious activities. In that and subsequent cases (including the five in this Court involving tax expenditures), a taxpayer pleaded the requisite harm by stating that public resources were funding religion; the tracing of particular dollars (whether by the Solicitor General’s “electronic tag” or other means) did not enter into the question. See DaimlerChrysler Corp., 547 U. S., at 348 (describing how the Flast Court’s understanding of the Establishment Clause’s history led the Court to view the alleged “injury” as the expenditure of “ ‘tax money’ in aid of religion” (quoting Flast, 392 U. S., at 106)). And for all the reasons already given, that standard is met regardless whether the funding is provided via cash grant or tax expenditure. See supra, at 11–16. Taxpayers pick up the cost of the subsidy in either form. See ibid. So taxpayers have an interest in preventing the use of either mechanism to infringe religious neutrality.[Footnote 10]

Indeed, the majority’s new conception of injury is at odds not merely with Flast, but also (if ironically) with our cases precluding taxpayer standing generally. See supra, at 3; ante, at 6–10. Today’s majority insists that legislation challenged under the Establishment Clause must “extrac[t] and spen[d] a conscientious dissenter’s funds.” Ante, at 15. But we have rejected taxpayer standing in other contexts because each taxpayer’s share of treasury funds is “minute and indeterminable.” Frothingham, 262 U. S., at 487. No taxpayer can point to an expenditure (by cash grant or otherwise) and say that her own tax dollars are in the mix; in fact, they almost surely are not. “[I]t is,” as we have noted, “a complete fiction to argue that an unconstitutional … expenditure causes an individual … taxpayer any measurable economic harm.” Hein, 551 U. S., at 593 (plurality opinion). That is as true in Establishment Clause cases as in any others. Taxpayers have standing in these cases despite their foreseeable failure to show that the alleged constitutional violation involves their own tax dollars, not because the State has used their particular funds:chanrobles.com-red

And something still deeper is wrong with the majority’s “extract and spend” requirement: It does not measure what matters under the Establishment Clause. Let us indulge the Court’s fiction that a taxpayer’s “.000000000001 penny” is somehow involved in an ordinary appropriation of public funds for religious activity (thus supposedly distinguishing it from a tax expenditure). Still, consider the following example: Imagine the Internal Revenue Service places a checkbox on tax returns asking filers if they object to the government using their taxes to aid religion. If the government keeps “yes” money separate from “no” money and subsidizes religious activities only from the nonobjectors’ account, the majority’s analysis suggests that no taxpayer would have standing to allege a violation of the Establishment Clause. The funds used, after all, would not have been “extracted from a citizen and handed to a religious institution in violation of the citizen’s conscience.” Ante, at 16. But this Court has never indicated that States may insulate subsidies to religious organizations from legal challenge by eliciting the consent of some taxpayers. And the Court has of course been right not to take this approach. Taxpayers incur the same harm, and should have the same ability to bring suit, whether the government stores tax funds in one bank account or two. None of the principles underlying the Establishment Clause suggests otherwise:chanrobles.com-red

James Madison, whom the Court again rightly labels “the leading architect of the religion clauses,” ante, at 13 (quoting Flast, 392 U. S., at 103; internal quotation marks omitted), had something important to say about the matter of “extraction.” As the majority notes, Madison’s Memorial and Remonstrance criticized a tax levy proposed in Virginia to aid teachers of the Christian religion. Ante, at 12–13. But Madison’s passionate opposition to that proposal informs this case in a manner different than the majority suggests. The Virginia tax in fact would not have extracted any monies (not even “three pence”) from unwilling citizens, as the Court now requires. The plan allowed conscientious objectors to opt out of subsidizing religion by contributing their assessment to an alternative fund for the construction and maintenance of county schools.[Footnote 11] See A Bill Establishing A Provision for Teachers of the Christian Religion, reprinted in Everson v. Board of Ed. of Ewing, 330 U. S. 1 , 74 (1947) (supplemental appendix to dissent of Rutledge, J.); Letter from James Madison to Thomas Jefferson (Jan. 9, 1785), reprinted in 2 Writings of James Madison, at 102, 113; see also Blasi, School Vouchers and Religious Liberty: Seven Questions from Madison’s Memorial and Remonstrance, 87 Cornell L. Rev. 783, 784 (2002) (the tax provision “permitted each taxpayer to specify which Christian denomination should receive his payment” and “[t]hose who did not wish to support a church could direct their assessment to a proposed common school fund”). Indeed, the Virginia Assessment was specifically “designed to avoid any charges of coercion of dissenters to pay taxes to support religious teachings with which they disagreed.” Feldman, Intellectual Origins of the Establishment Clause, 77 N. Y. U. L. Rev. 346, 383 (2002).[Footnote 12]

In this respect, the Virginia Assessment is just like the Arizona tax credit. Although both funnel tax funds to religious organizations (and so saddle all taxpayers with the cost), neither forces any given taxpayer to pay for the subsidy out of her pocket. Madison thought that feature of the Assessment insufficient to save it. By relying on the selfsame aspect of the Arizona scheme to deny the Plaintiffs’ claim of injury, the majority betrays Madison’s vision:chanrobles.com-red

III

Today’s decision devastates taxpayer standing in Establishment Clause cases. The government, after all, often uses tax expenditures to subsidize favored persons and activities. Still more, the government almost always has this option. Appropriations and tax subsidies are readily interchangeable; what is a cash grant today can be a tax break tomorrow. The Court’s opinion thus offers a roadmap—more truly, just a one-step instruction—to any government that wishes to insulate its financing of religious activity from legal challenge. Structure the funding as a tax expenditure, and Flast will not stand in the way. No taxpayer will have standing to object. However blatantly the government may violate the Establishment Clause, taxpayers cannot gain access to the federal courts:chanrobles.com-red

And by ravaging Flast in this way, today’s decision damages one of this Nation’s defining constitutional commitments. “Congress shall make no law respecting an establishment of religion”—ten simple words that have stood for over 200 years as a foundation stone of American religious liberty. Ten words that this Court has long understood, as James Madison did, to limit (though by no means eliminate) the government’s power to finance religious activity. The Court’s ruling today will not shield all state subsidies for religion from review; as the Court notes, some persons alleging Establishment Clause violations have suffered individualized injuries, and therefore have standing, independent of their taxpayer status. See ante, at 1–2, 17–18. But Flast arose because “the taxing and spending power [may] be used to favor one religion over another or to support religion in general,” 392 U. S., at 103, without causing particularized harm to discrete persons. It arose because state sponsorship of religion sometimes harms individuals only (but this “only” is no small matter) in their capacity as contributing members of our national community. In those cases, the Flast Court thought, our Constitution’s guarantee of religious neutrality still should be enforced:chanrobles.com-red