that is live at 9:00 a.m. eastern on c-span.org 3 -- c- span 3. >> the u.s. supreme court program will talk >> we will hear argument first this morning in arizona christian school tuition organization v. winn and the related case, garriott v. winn. >> thank you, mr. chief justice, and may it please the court -- for years, arizona has permitted private citizens to contribute money to private organizations set up by private individuals and has let those organizations use that money

towards scholarships when individuals apply for them. the ninth circuit erred first in finding that the taxpayer plaintiffs had standing, and second in striking the program down. on standing, this lawsuit fails each of the three necessary elements. regarding injury in fact, the key point is this: not a cent of the respondent's money goes to fund religion. if you placed an electronic tag to track and monitor each cent that the respondent plaintiffs pay in tax, not a cent, not a fraction of a cent, would go into any religious school's coffers. >> mr. katyal, their point is that this tax money does belong to the state that private individuals are using, because it is money that, even by the new amendment, says either you pay it to the state or you use it for this purpose, but it's the state's money and it's giving you by its largesse the right to redirect it. that's their argument. >> right. >> so it would be the taxpayers' tax dollars being spent on religion, if they could sustain their claim.

>> there are two problems with that. one has to do with injury in fact. the other has to do with redressability. with respect to injury in fact, our point is as you track the taxpayers' dollars, it doesn't actually fund any religious program, unlike the -- unlike flast and other cases in which this court has considered taxpayer standing for religion. their complaint is not that the government is spending money that the taxpayers have -- money that has been extracted and spent of the taxpayers. their complaint is that someone else's money is not being extracted and spent enough. and the relevant language in flast says that for taxpayer standing to occur, it's, quote, "his tax money" must be extracted and spent, and here that is not occurring. now, with respect to the other argument, not injury in fact but addressability and causation, our point is this: it's speculative as to whether or not that chain of events that you spelled out, justice sotomayor, would actually happen. as this court said in

cuno, for example, when a tax credit is given sometimes that actually reduces the amount of money the government has to spend. it doesn't increase it. and so that's different than the direct outlay that was at issue in flast. >> then is it constitutional if we get a new system? here's what the system will be the taxpayers who are religious will be able to check a box and the check that they send to the irs -- it's a possible system -- what happens is that that check is cashed by an official and the cash is given to the local priest to say prayers for the individual who contributed the money. and in your view, there is no one who could challenge that? >> well, let me say two things about that. first is that is not all that different, justice breyer, than what we have today with 0c deductions. >> the difference is, of course, that in the one case it's a deduction and in this case you are paying it 00 percent with money that would otherwise go

into the coffer. i understand that. but i am interested in, conceptually, does the government think that there is no one who could challenge that? >> i don't think that any taxpayer could challenge that. that is, depending on the hypothetical, justice breyer, i'm not sure if the government is specifying which religious organizations might be eligible for the check box. but if the government is doing something that is underinclusive and only giving tax credits to one set of religious organizations, that's a texas monthly problem, as this court -- >> if you go back into history, it could have been the case that the -- as long as they were fair to every religion, the first congress could have funded prayers throughout the nation in churches for anyone to go and pray and that would not have violated thestablishment clause, or if it had, nobody could have challenged it. >> no, justice breyer. two things on that. first is we are only talking

about standing, not the merits. and with respect to standing, if the government funded only religious organizations or religious prayer, i do think that other organizations would have standing -- not as a taxpayer, because this court has been very careful in flast and in hein to say there is an extremely narrow exception for taxpayer standing, a narrow exception to frothingham, but other organizations would have texas monthly standing because they're -- >> counsel, does anyone have standing, in your view, to challenge this scheme? >> the way this scheme is set up, our answer is no. and i think that accords with this court's general reluctance to confer taxpayer standing in this area. >> and if we leave out the fine points that you were discussing, isn't the underlying premise of flast v. cohen that the establishment clause will be unenforceable unless we recognize taxpayer standing?

>> i don't see that, justice ginsburg, in flast. i think flast is a very narrow exception for when someone's dollars are being taken out of their pocket and spent by the government on religion, and i don't think that's happening here. >> flast is gone; is that right? flast is gone. there is no more -- there is nothing more to flast, because it just happened that nobody had thought of this system at the time of flast. >> justice breyer -- >> if they had, they could have -- what? thinktice breyer, i don't flast is gone at all when there is direct government outlays to spend on religion like flast. >> no, but there needn't be, because all you have to do to get around it is to create what we have here. >> well, i do think that that can get around it, that can get around it in some circumstances, and again, those who are underincluded in a government program may have standing, not as a taxpayer. but at the end of the day, justice breyer, if that's the result, that's the result for every other clause in the constitution. taxpayer standing is the most narrow of exceptions, and --

>> but there is a plaintiff -- we have a bill of rights and most provisions have plaintiffs who are hurting, whose speech is being suppressed, but this one doesn't have. it's in the constitution like all the others, and i thought, to be candid, that that's what the problem was in flast v. cohen, and that's what the court was responding to. >> i don't see that in flast, justice ginsburg, but be that as it may, i think this court in valley forge was very clear to say that if, at the end of the day, you can't find a plaintiff with standing, that is not an excuse to relax the -- our general requirements of article iii standing. and here, if you granted the plaintiff standing, what you would be granting is, for the first time, a tax credit which is a complaint about someone else's money not being spent to a high enough level. >> so if you are right, general katyal, the court was without authority to decide walz,

nyquist, hunt, mueller, hibbs, this -- this very case, just a few years ago? that the court was out of authority to decide any of those cases, but somehow nobody on the court recognized that fact, nor did the sg recognize that fact? the sg participated, i believe, in each of those cases. >> right. so let me say two things about that. first is, i do think it is very much just like frothingham, in which frothingham had to deal with this exact problem. the court had conferred standing in taxpayer standing case after taxpayer standing case and then, when it was teed up and presented to the court as a question about article iii standing, the court said, no, we shouldn't have granted taxpayer standing in those cases. so my answer to you is yes. now, i do think that this court's decision in hein i think reiterated some of the fundamental principles and the limits on flast. and i think the court -- the plurality made quite clear that it would go no further than the facts of flast. and to grant standing here, you have to go -- tremendously

depart from what flast is about a direct government outlay of funds out of -- taking money out of someone's pocket to fund religion. >> i just want to make sure i heard your answer to the -- you said your answer is yes. in other words, you agree with justice kagan's criticism of those cases and you said, yes, she's right, those cases were wrongly decided. >> they could have gone out -- the results may have been the same. it just would have been -- would have been on standing instead of on the merits. mueller, for example, upheld the programs. so the bottom-line decision would have been the same, but the way in which the court got there would have been so that there was no -- >> but you would have said there would have been no standing in those cases. >> no taxpayer -- no taxpayer standing. now, there may have been other forms of standing, texas monthly standing, that could have been alleged to challenge those programs, yes. >> but it wasn't -- it wasn't -- i don't remember whether the government participated in the winn case when it came up under the tax injunction act.

>> we did, and in the first footnote -- >> and there wasn't a word from the government about lack of standing. >> the first footnote in the brief, justice ginsburg, acknowledged the fact that standing hadn't been pushed or pressed below. but i acknowledge that, particularly in the wake of hein, should another case arise, the government will -- will acknowledge the standing defects and brief them as we are here. our point on redressability is not simply that the -- that the tax -- that the cost of the program is speculative. it's also that the relief that the plaintiffs are seeking in this case won't redress their problem. that is, if you gave the plaintiffs everything they are asking for, the very same religious schools and the very same religious stos would continue to be funded. the very same religious stos would continue to be funded because they would leave in place -- and this was my answer to justice breyer -- the tax deduction, the 0(c) tax

deduction. so there would still be government revenue being spent in favor of these religious stos under their program. it would just be at the level of one-third instead of 0%. -- 100%. i don't think that satisfies their problem. i don't think james madison's remonstrance would be satisfied if madison were told, well, you're not going to be taxed three pence, you will be taxed one pence. the principle is what matters, the principle of flast. if i could reserve the balance of my time. >> thank you, general. ms. bickett. >> mr. chief justice, and may it please the court -- arizona's tuition tax credit does not violate the establishment clause, because it's a neutral law that results in scholarship programs of private choice. it's neutral because, like the tax deduction that the court

upheld in mueller, it's one of many tax-saving devices, including some other credits that are available to arizona taxpayers on a neutral basis. >> ms. bickett, could you explain something to me just -- i have been puzzling and puzzling over this scheme. can you tell me why arizona adopted this sort of scheme rather than the more typical tuition voucher scheme? in other words tuition voucher schemes the state just gives the voucher or scholarship or what have you. this is so much more complicated and complex and unusual. and it just left me wondering why it was chosen or what the state thinks the advantages of it are now? >> yes, justice kagan. one of the things that is true in arizona that was not true in ohio is that under the arizona constitution any direct aid to private schools is prohibited. the other thing about the tax

credit program is that it does encourage contributions not only from parents but from the community at large. and this then provides money for low-income students, students from low-income families. >> does the record show the extent to which there are donations by people who do not have students? >> could you -- >> does the record show the extent to which there are these additional donations that you just referred to? and get -- >> your honor, of course it was at a motion to dismiss phase. what the record shows is that there's some reports that -- studies that have been done that show that there have been some children that have switched from public schools to private schools as a result of the program, that many of the scholarship programs are -- in fact, most of the scholarship programs provide scholarships based on financial need.

>> you haven't -- i don't think you answered his question. the question was, is there anything in the record that shows whether any of the money that's involved here comes not from parents, but rather from others who can contribute to the program? >> well, what the record shows is that there have been -- there is a large amount of contributions. arizona't -- we have department of revenue reports that list the number of contributors and who contributes -- or not the individuals who contribute. i -- it doesn't specifically line out who the contributors are, whether they are parents or whether they are not parents. >> well, i suppose if some of the contributions are considerable, like a million dollars, that couldn't be just

a parent, right? >> right. >> are there contributions of that size? >> again, the record doesn't show what the size of the contributions are. it shows the number of contributions and the total amount of contributions. >> you only get -- if you give a million dollars, you still only get a tax credit, right? -- $500 tax credit, right? >> that's correct, your honor. the programs are programs of private choice, because any aid that reaches religious schools does so after only after at least four levels of private decisionmaking. arizona sets up the neutral rules for the -- this tax credit, and after that private individuals and organizations take over. anyone can form a school tuition organization, and the increase in the number and

diversity of school tuition organizations over the years that the tax credit has been in existence demonstrates in -- fact that this is free for everyone to participate in. >> the thing that worried me is this. i might get your answer. probably, arizona spends billions of dollars on public schools, doesn't it? i don't know the exact amount. >> yes, your honor. >> let's take 30% of that and spend it through this program on religious schools. imagine that happens. at that point, people might get into considerable discussion about what qualifies, what doesn't, whether it is a balanced school, or if it is just teaching religion, but the rules are. how was arizona dealing with this problem, by saying there are no regulations? is there a system for dealing

with the legitimacy and the circumstances under which a particular religion -- religious school prelate -- qualifies for this program? who decides and how? >> under the tax credit program, schools have to be qualified private schools in order to participate. >> that must be a set of regulations and rules. >> primarily what it is is that private schools in arizona satisfy the compulsory education law as long as they meet the requirements that the public schools have in terms of providing -- the subject matter that the public school -- >> most standards have nothing to do with this program. there are standards of any private school that they must meet in order to meet the educational requirements of arizona. >> correct. >> when do they teach the

religion part of their program? when do the private schools -- normally, i am not an expert, but what you have to do to be a school is a very complex thing. you have all kinds of requirements that eat up quite a lot of the day. i just wonder how the religion part fits in. has there turned out to be no problem? when do they teach religion? 6:00 a.m. does it matter if the person's qualified? i had a case on this in the first circuit and it turned out to be surprisingly complex. i just wondered if there turned out to be any problem at all in arizona. >> the record does not reflect that and i am not aware of any problems with private schools in arizona, and certainly not ones that have participated in this tax credit program. >> suppose that an sto discriminated on the basis of

race. no hispanic, no white, no black will receive our money. there is no federal statute on it, no state statute prohibiting it. would there be a constitutional violation? federal constitutional violation? >> if it was a private institution -- >> it is an sto. >> that is a private organization. >> there are no attributes of state action that would suffice to allow a discriminated person to bring suit, a person who has been discriminated against? >> as long as there was not a federal law -- >> hypothetical. there is no state statute. it is a state action question, what i am asking. >> unless the discrimination can be attributed to the state --

>> don't you think an argument could be made that it could be attributed to the state? the state has all sorts of rules about what an sto has to be. the state provides the mechanism through the credit for the funding. >> limits the funding. >> i assume there is a tax deduction for contributions to churches. >> yes, your honor. >> many churches discriminate on the basis of religion, don't they? >> yes. >> does that pose a constitutional problem, do you think? >> no. >> what about the answer to my question? >> well, your honor, because -- >> you are saying sto's are sufficiently private. >> the name of it was bob jones. it was a private school and it discriminated on the basis of race. the question was whether they

could have tax-exempt status so there could be donations to them. do you remember that case? >> yes, your honor. the court held that the department of revenue could preclude the university from having tax-exempt status because that violated public policy. therefore, they were not entitled to 510c3 status. to hear all of these organizations are 501c3 organizations, they could not discriminate based on race. >> i will rephrase the question in a slightly different way. i am assuming you would agree that if this was a straight tuition voucher program, the state could not give vouchers on the basis of religion, could not say, if you are a catholic, you

do not get these tuition vouchers, but what the state has done here is to set up a scheme that uses intermediaries that can make exactly that distinction, that can say, sorry if you are a catholic. you don't get scholarships out of our sto. why should the state be able to do that? if the states cannot do it in providing tuition vouchers, why should the state be able to set up a system using intermediaries that exist for no other reason than to administer this program that can make those distinctions? >> your honor, the state is not making those decisions. it is private organizations. anyone can set up a school tuition organization. school tuition organizations can support solely secular schools. they are in existence. there has been no problem setting those up.

five of the top 10 sto's do provide scholarships to any school of the parents' choosing. contentionintiff's is that there are sto's that make these distinctions that clearly would be impermissible if the state administered the program. these are not preexisting charitable organizations or preexisting schools. they are entities that are set up for the purpose of administering this program. the state is saying it can make distinctions that the state itself cannot. >> your honor, if i may correct you, there was one school tuition organization that preexisted the tax credit. the private schools that participate, for the most part, did exist before this school tuition organization. what this program allows private

organizations to do, it allows parents to get together with private schools and form school tuition organizations. >> you said there was an sto before this program. bu it did not get the benefit of money from taxpayers that would have gone -- that money went to arizona, not to the sto, before this scheme -- >> before this scheme was created, they would have gotten a tax deduction, a federal tax deduction, and the state deduction, rather than a tax credit. the difference -- there is not a significant difference between a tax credit and a tax deduction in terms of constitutionality. the only difference between a tax deduction is that, for the purposes of a tax deduction, it depends -- the value of it depends on the tax bracket of

the taxpayer, whereas a tax credit, the value depends -- it is equal for all taxpayers. this court has never made a distinction between tax credits on the one hand or tax deductions. any money that the government does not take in would then be the equivalent of state money, and that would then undermine 501c3 organizations. what you need to look at when arizona decided to give a tax credit for this is it was thinking of -- is this a worthy public purses -- purpose to not take in certain money that the

state would normally be entitled to if they gave contributions for that purpose? so, it is not a question -- that type of purpose has been upheld by this court in laws, in hernandez, and again, there is not a basis for distinguishing here between what arizona is doing and other 501c3 organizations that have been able to enjoy the benefits of tax savings, tax benefits, and help give scholarships to religious organizations. >> thank you. mr. bender? >> thank you, mr. chief justice. i would like to start with the

statement that if we win this case, you do not get any relief. much money would be -- would go into religious education, as goes now. that shows he does not understand our claim. our claim is not that money is going -- that state money is going to religious schools. our claim is that state money is being given to the beneficiaries of a state spending program on the basis of religion. it is a claim about discrimination in the distribution of the state funds. >> but, there is discrimination. the school seems to get the most money on the list does not appear to be a religious school at all. it is not even discrimination between religion and non- religion. >> if you think that is invalid, which i don't, but it does not favor religion at all. >> i did not say it favored or

didn't favor -- >> what is your problem? >> government benefits in government program cannot be given to the beneficiaries of the program on the basis of their religion. if a parent comes to one of these religious -- >> you cannot have a government program that gives out money indiscriminantly to certain organizations that say, provide hospital services, and it would be unconstitutional if that included organizations that were religious organizations, as well as organizations that or not? that would be unconstitutional. you must positively disfavor religion. >> no, you must not. you must give the money to beneficiaries without taking their religion into account. >> how does this take the religion into account, when the program works perfectly in exactly the same way if it is a

norelious school? they don't care if it is a religious school or not. >> because the sto's are giving out government funds. they are on the government's behalf distributing tax revenues. suppose that -- >> i don't think that is -- i hope that was not my question. how is it discriminating on the basis of religion at the sto's, the government money, it does not care if it goes to a religious school or not. >> to the sto, most money is given out by sto's that do care whether it goes to a religious school. >> the state money going to the sto, the state doesn't care whether it goes to a religious or secular sto. >> that doesn't matter. if the state's grantee cares, that is unconstitutional. >> i thought we've held that when you have the decision made by a private entity whether to use the money to go to a religious school or non- religious school, that does not violate the constitution because the decision is not made by the state -- by the state.

>> i believe the court held the opposite in bowen, where the decision to use the money for religious purposes was made by the grantee, not paid by the government. the government program in that case was neutral. grantees were given funds to educate lessons in sexuality. the court held that although the program was constitutional on its face -- it was not unconstitutional because religious organizations could participate as grantees. it would be unconstitutional if those organizations distributed the benefits of the program on the basis of religion. think about a head start program. the government sets of 50 programs in a community. they are all run by private organizations. some religious, some not. >> just to get back to bowen for a moment, the entities that were distributing the funds could be private or religious.

>> same as here. >> the entities in bowen were not identified. the recipients of state funds were not identified as religious or not. >> i don't understand. in bowen, i think the court held, if the grantees were to give out their services on the basis of religion, that would violate the clause. >> do we know that the schools here do that? do we know the religious schools do not admit people of a certain religion? >> i think we do know that and the complaint alleges that. that is not the point. the point is not what the religious schools do. the point is what the sto's do. they are government grantees distributing government funds. the constitution prohibits organizations that distribute government funds as part of a

government spending program -- >> it is to say that any money the government does not take from me is government money. >> this is money the government takes from people. >> this money has never been in the government's coffers. the government has declined to take the money. >> but it is raised by the state income tax. every tax credit to a dollar is a dollar that has to be paid either to the government as income taxes due or to an sto. >> i will give you credit in your brief. you said you are -- you said if you are wrong on that point, you are folding your tent and leaving. i must say, i have some difficulty that any money that the government does not take from me is still the government's money. if you reach a certain age, you can get a card and go to certain

restaurants and they give you 10% credit. i think it would be rather offensive for the cashier to say, and be careful how you spend my money. [laughter] that is the whole point of your case. >> no, it is not. >> the money involved in this case is money generated by imposition of the state's income tax. if there were no state income tax -- >> would you say the same thing about a tax deduction? >> what i say what about a tax deduction? >> that it is the government's money. >> no, i wouldn't. >> they are kind enough to give the taxpayer a deduction for certain contributions. >> when a taxpayer makes a deduction, the charitable deduction is made from the taxpayer's money. at the time the taxpayer makes

that deduction, the taxpayer can do anything he wants with that money. that is not true of this tax credit. at the time this tax credit is taken, the taxpayer owes the government, let's say $5,000 in state income tax, you have to pay that -- it is not your money. you cannot keep it. you owe the government that money in income taxes. >> why isn't that true of the tax deduction also? this is a very modest tax credit. the tax deduction that a wealthy person would get by making a contribution to a college or university that has a religious affiliation is much more valuable than this credit. >> it does not turn on whether it is valuable or not. it turns on whether, when the taxpayer makes the payment, the taxpayer is paying the taxpayer's own money or money the taxpayer owes to the government. you make a charitable contribution with your own

money. that is not money you own the government -- you owe the government. this credit does not come into play until you figure out the taxes. >> i simply don't understand that. somebody does, though. it is december 31. they know how much tax they will have to pay for that year. they can know exactly what their taxes will be. it will be x. if they make a deduction, it will be x-y. what is the difference? >> to me, the differences that the tax deduction is given to charitable contributions. i think the court would decide, if it faced the question -- i don't think it has ever had to -- that it is constitutional for the government to support private charity. if the government will provide -- will support private charity by allowing you to deduct contributions and you cannot leave religious programs out of that program.

that would violate the clause. if you believe the charitable deduction is a constitutional thing for the government to do, to support private charity, then you have to give the deduction to people who contribute to religion. so, yes, there is a government support for that private charitable contribution. the money in this case is not a charitable contribution. mr. katyal says that is not the government's money. whose money is it? is it the taxpayer's money? now. if you don't take my word for it, look at what the sto's say on their web sites about this program. one of them says, quite frankly, you can give charity with someone else's money. it is a miracle. another one says, it won't cost you anything. you can give charity with other

people's money. whose money is it? >> what difference does it make what they say on their website? there is an important philosophical point here. you think that all the money belongs to the government. >> know. >> except to the extent it deigns private people to allow to keep some of it -- deigns private people allow us to keep some of that. >> it imposes an income tax and people owe the government a certain amount of money in income taxes. the government says, you don't have to pay it to us. you can pay it to an sto. that is a payment of government funds. >> they don't owe it to the government if they made this contribution. that is the whole point. they don't owe the tax to the extent they are given free to give the money to one of these institutions. you posit at the very beginning that you owe a full amount of taxes. that is not true. you do not owe it if you make the contribution.

>> i disagree. >> you owe the tax? >> if you look of the arizona income tax form, it says, here's your ince. apply the tax rate to the income. here are your taxes due. $5,000. you may pay that, in part, by giving $1,000 to an sto. you are paying your taxes. when taxpayers take the $1,000 -- >> that is the problem. they have to revise the forms so it is a deduction before the line. is this a major lawsuit? >> this is a government spending program. is there any doubt about that? money in this program is not private charitable contributions. >> i see your argument. in zelman, the holding, which i was not in agreement with, that the government can have a spending program. what they did was the government

spent money in the form of vouchers to be given to private individuals to use for such education as they wished that met certain standards, including religious schools. what is the difference between the program here and the one that was held constitutional in zelman? >> in zelman, the money went to the parents without any religious discrimination. religion was not involved in the distribution of the money. the parents in zelman got funds based on their financial need and the fact that their children went to school in cleveland, which was a failing school district. the program was to give them, based on need, was to give them a voucher. nobody said to the parent, what is your religion? nobody said, will you send your child to a religious school? the court said it as clearly as it could in zelman that that would be unconstitutional.

>> the sto gives a scholarship only to catholics to go to catholic schools? >> exactly. >> the government money you claim is at issue here is the money that contributed to the sto. that decision of whether to give the money to an sto or not, whether to give it to a religiously affiliated sto or a nonaffiliated one, that is in the hands of a private individual, just as the voucher program was. >> that is true. >> there is no discrimination in that choice. >> let me put it to you this way. suppose the government gave money to the sto directly, itself. the sto then gave out the scholarships. would it be constitutional for the sto to say to a parent who

asks for a scholarship, are you catholic? if you are not, we will not give you a scholarship. >> perhaps not, but you have an intervening parent or contributor. it is that person who is making the decision of whether to give it to a religious or non- religious organization. it is not the government making that decision. that was the same thing in zelman. >> it is not a parent by justice kennedy's question before. parents are not allowed to give contributions to scholarships for their own children. the people who can claim the tax credit -- the one who get the scholarship cannot be a dependent. >> they said, we will give you tuition if you otherwise qualify for your child to go to the school that you wish to go to. if you are jewish, or protestant, and you want to go to st. joseph's catholic school, that is fine. they won't keep you out.

vice versa. in your opinion, that would be constitutional. the only thing you are challenging is the rule that they will not -- the sto's will not give the scholarship to a protestant to go to catholic school. how do we know -- >> we allege that the sto's that give up the majority of the funds -- now it is about 70% of the funds -- that the sto's giving up the majority of the funds only give the funds to parents who will send their child to a religious school. >> but that is different. you were complaining about -- >> i am jewish. i want my child to go to st. joseph's. do i qualify or not? >> that depends on the sto. >> your complaint is only with

the sto's -- >> exactly. we allege they exist and no one doubt that appeared >> i am sorry. i want to make sure i understand. you just said that your complaint was that the sto's are giving scholarships based on the student'selign. i thought another part of your complaint was the sto's were giving just to the schools. >> sto's don't give scholarships to schools. they give them to parents. >> but to attend that school. the essence of your complaint is that some of the sto's are requiring that the recipient -- recipient child be of a particular religion. >> that, and some of the sto's are also requiring that in order to get the scholarship, the

parent agree to send the child to a particular religious school. >> that does not get you there. >> you are saying both of those. >> both of them. >> could i ask you, do you understand the beneficiaries of this program? as the state said -- the beneficiaries are parents, or are the beneficiaries the general taxpayers? >> the beneficiaries are the parents and children. that is what this program is for. the states that the program to help parents send their children to non-public schools. to do that, they are going to give them scholarships. the scholarship money is made available. >> i would assume then it is -- would assume that it is the parent. there would be treated equally. >> exactly. the scholarships, as zelman said, the scholarships or

vouchers have to be available to parents on a religiously neutral basis. the scholarships are not allowed to be made availableo parents according to their religion or according to whether they will send the child to a religious school. both of those kinds of discrimination are going on here. >> can i go back to your point you were making? you were making the distinction between the taxpayer who makes a charitable donation, whether that taxpayer -- they could spend it on fine clothes, on gambling, on this or that charity. this contributor does not have the universe to pick. this one has -- you give it to the government or you give it to the sto. >> exactly. right. it is not the taxpayers' money.

it is confusing. we are talking about my clients, who are general taxpayers, whose money is being used to fund this program. we're talking about the taxpayers who take the tax credit. they are two different types of taxpayers. >> if you give tax deductions to people who only gave charitable contributions to religious institutions, there were be a problem. >> i think it would be constitutional if it said that you get a deduction for making a charitable contribution to an educational organization, and that that can include a religious organization. you cannot set up a program that gives you a deduction -- if you're going to support private

charity, you have to support religious charity in the same way you support non-religious charity. if you are going to have -- >> there was the difference between this and the federal tax deduction for charitable contributions. it is available for a broad range of charities, whereas this is available only for a very narrow range. >> i might have misunderstood the question. i think the question was, if at the time the taxpayer makes the charitable contribution, he will take a deduction, the taxpayer can do anything you want with that money. he can take a vacation. he can give it to a charity. he can buy clothes with that. he can buy food with it. it is a completely open system. nobody tells the taxpayer what yesterday. in this case, when the taxpayer writes that check to the sto, the taxpayer cannot keep that money, cannot use it on a vacation, cannot use it to buy food, has to either pay it to the state or pay it to an sto.

>> the same is true of charitable deductions. when you take a charitable deduction, you don't have the money anymore. you have given it to a charitable organization. now, you are allowed to give it to a particular religion, in particular church, and there seems to be nothing unconstitutional about that, right? what is unconstitutional here about the private -- the private decision to give a benefit to an organization that only supports particular schools, and only supports people of a particular religion to go to that school? i don't see any difference. >> there is nothing unconstitutional about the taxpayers sending the money to an sto if sto's did not discriminate on the basis of

religion in giving that money out. >> but churches discriminate on the basis of religion. when i take my deduction to give it to a particular church, that church discriminates on the basis of religion, but that is ok. >> that the government said, you can pay your taxes, don't pay them to us, pay them to a church, and the church gave benefits only to people of a certain religion, i believe that could be -- >> it really is just that line in the tax form that you're concerned about. the only relief you really need is a change in the tax form. >> it is the difference between charity and paying your taxes. when you make a charitable contribution, you are making a charitable contribution. it costs you money. in arizona, if you make a contribution of $1,000, it costs you $950 if you are at the maximum tax rate. in arizona, if you take this tax

credit, it costs you nothing. it is not charity. >> just to follow up on justice scalia pose a question, if this system were set up exactly as it is now, but contributions to sto's are deductible, you would have no problem? >> contributions to sto's are deductible from one's income tax. >> right. >> we would not have a problem with that. >> the difference is that arizona set up a system where you have a tax credit instead of a tax deduction. >> of course. >> that would be true if the top marginal rate were 90%? >> yes, it would be true even if the top marginal rate were 90%, which will never happen in arizona. [laughter] >> the federal rate has been that high at times. >> i understand. that is still charity.

if the top rate is 90%, when you give that money, it is your money. you can use it for anything you want. even if you are in the 90% bracket, you are giving some of your own money. you are engaging in charity. the constitution permits the government to subsidize private charity. if the government will subsidize private charity, it cannot leave religious charities out. that is the dividing line. if the government is subsidizing private charity, in this case, they are not doing that, it is not private charity. >> if this is government money, why would it be unconstitutional for this scheme to exist -- would it be constitutional for the scheme to exist if the sto's did not discriminate at all? >> because it is okay to use government money for non- religiously discriminatory purposes. you can buy a solar water heater

that is a 100% tax credit. when you buy the heater, you get something for the money. this tax credit is a strange kind of credit. this is a tax credit that is only used to pay your taxes. that is the only function it has. >> you have sto's that say, we will only give scholarships for religiously affiliated schools, but we will not discriminate on the basis of the student's religion. >> right. >> of this is the government's money, you think that would not be -- >> if an sto discriminates, we only give to people of a certain religion, or by saying we will only give you a scholarship if you send your kid to a religious school that we designate -- >> you said the opposite earlier. >> i hope i didn't. >> what is the problem with that?

suppose the government gives its money to put cat scans in hospitals. it has certain beneficiaries. one group of beneficiaries is the association of catholic hospitals. another is the association of jewish hospitals. another is a totally secular hospitals. there are tax credits for all three. the catholic group will give it to catholic hospitals, and so forth. what is wrong with that? >> i don't get your hypothetical. >> they have government money, like you claim this is, and they say they will give it to one organization -- give it to organizations, and we expect them to distribute it. they will distribute it to those who are their members and, in some cases, their members are religious organizations. in some cases, they are not. what is the difference between that and what happens here?

>> it depends on who the beneficiaries of the government are. >> the beneficiaries, catholic hospital programs, cats can program -- cat scan program will be in catholic hospitals. they belong to the catholic hospital association. money will also go to the secular hospital association. that part. that is the last part. >> i am not clear on your program. if it is a government program to benefit hospitals, the benefits have to go to hospitals on a religiously neutral basis. >> the government says -- it does give the money away on a religiously neutral basis. some of the hospital associations are supposed to give it to their members, all of whom would be religiously affiliated. >> the hospitals are the beneficiaries.

that is the difference. the beneficiaries here are not the sto's. the beneficiaries are the parents. the sto's are a conduit of government bonds. the parents are the beneficiaries and the constitution requires that the benefits of a government spending program go to the beneficiaries on a religiously neutral basis. in zelman, the beneficiaries were the parents. the vouchers had to go to them. >> i don't understand the answer question.e breyer's you give it to the hospital equivalent of the sto. why aren't the hospitals the beneficiaries of that program, just as you say the parents are here? >> it the hospitals are the beneficiaries, they have to give the money on a religiously neutral basis. >> the analogy would be the patients are the beneficiaries. the government wants to help cancer patients. it will give money to hospitals

to help cancer patients. it gives money to various hospitals under this program. if one of those hospitals says, we only treat catholic cancer patients, that is unconstitutional. >> that is the other issue. we are trying to separate, in your argument, the issue that some of these organizations are religiously affiliated. -- affiliated from the argument that they will only give money to individuals of a particular religion. i understand your argument for the latter, but i must say i do not understand your argument for the former. not if you except these other -- >> if i go to get a scholarship from an organization and they say, where do you want to send your child, and i say i have not decided, they will say, i will only give you a scholarship if you send your child to a jewish school, which teaches people how to pray in the way jewish people

pray, and has -- education is jewish religious education, that is religious discrimination. >> thank you. you have four minutes remaining. >> thank you. i think i have this right. we are talking about my client, was money is being used to use -- to fund this program. that is not a description of what is going on here. there's a special solicitude for taxpayers when money is taken out of their pocket and used to use -- used to fund religion. if you accept all of this discussion, not a cent of their money is going to fund -- >> it seems to use that word "nexus." you are quite right that in flast, that was the case.

why isn't it-- also a nexus where you have this complicated system designed to make the ordinary taxpayer pay a little more in this kind of instance, where what you have done is directly subtract from the treasury -- treasury $5,000 cash to turn over, in the view of the plaintiffs, to a purely forbidden religious purpose? >> first, the relevant language in flast is not at the nexus test, it's the definition of what that taxpayer claim is. >> was that in that instance in flast? >> that the general description flast says about how taxpayer standing will go forward. if there is any doubt, valley forge makes that clear. dissenters said what you said. let's look to economic effects and that alone will be enough. it is just property clause.

it does not really matter. it is the bottom line on the treasury. this court said no, that is not the case. >> flast could not have meant that it is your particular dollar. there were be no way to know it is your particular dollar. that could be a silly thing to say. what flast said was that taxpayer dollars, not your dollar, pat but taxpayer dollars, are going to this activity in the same way it is going to this activity here. >> i don't think that is what flast is. i think it is about the micro fraction of a cent coming from your pocket and being used to fund religion. that is what madison complained about. it may be very small, but there is a special harm of conscious when it is your money being used to fund a program directly as to which you don't like. >> flast talks about the nexus. >> flast talks about the nexus.