VAN D. MUELLER AND JUNE NOYES, ET AL., PETITIONERS v. CLYDE E.
ALLEN, JR., ET AL.

   No. 82-195

   In the Supreme Court of the United States

   October Term, 1982

   On Writ of Certiorari to the United States Court of Appeals for the
Eighth Circuit

   Brief for the United States as Amicus Curiae in Support of
Respondents

            TABLE OF CONTENTS
   Interest of the United States
   Statement
   Summary of argument
   Argument:
      Minnesota's tuition tax deduction does not violate the
      Establishment Clause
      A. The Minnesota statute has a secular purpose
      B. The primary effect of the Minnesota statute is neutral;
          it does not advance religion
          1. The Minnesota tax deduction affords only an indirect
             and insubstantial benefit to religion
          2. The Minnesota statute benefits a broad class
      C. The Minnesota statute does not foster excessive
          government entanglement with religion
   Conclusion

                          QUESTION PRESENTED

   The United States will address the following question:

   Whether a Minnesota statute providing a state income tax deduction
for tuition payments to both public and private elementary and
secondary schools, as part of an overall scheme of deductions for a
broad array of educational expenses, violates the Establishment Clause
of the First Amendment.

                     INTEREST OF THE UNITED STATES

   This case concerns the constitutionality of a state statute
providing a deduction for tuition payments to public and private
elementary and secondary schools as part of a system of various types
of state support for education.  The Administration, as part of its
overall program to improve the quality of education, supports federal
legislation to provide tax relief for parents who choose nonpublic
schools for their children.  See Letter to the Speaker of the House
and the President of the Senate Transmitting Proposed Legislation, 18
Weekly Comp. Pres. Doc. 828 (June 22, 1982).  Such relief is the best
means of "promot(ing) diversity in education and the freedom of
individuals to take advantage of it, and to nurture the pluralism in
American society which this diversity fosters" (ibid.).  See also
Tuition Tax Credits:  Hearings on S. 550 Before the Subcomm. on
Taxation and Debt Management of the Senate Comm. on Finance, 97th
Cong., 2d Sess., Pt. 2, 6 (1982) (statement of Terrell H. Bell).  Tax
relief is also important because the cost of both public and private
education has risen dramatically in recent years.  If nonpublic
schools were no longer an available alternative, the resulting
increase in public school attendance would impose significant new
burdens on state and local taxpayers, and threaten the quality of
education nationwide.

   Since the Minnesota statute is similar to federal legislation
proposed in the 97th Congress, and likely to be reintroduced in the
98th Congress, the United States has a strong interest in supporting
its constitutionality.  /1/

                               STATEMENT

   1. Minn. Stat. Ann. Section 290.09 (22) (West & Cum. Supp. 1982)
authorizes a state income tax deduction for amounts paid for tuition,
textbook, and transportation expenses incurred on behalf of children
attending private or public elementary or secondary schools.
Taxpayers may deduct only amounts actually spent, subject to certain
maximums.  /2/ Deductible expenses must be incurred at schools that do
not discriminate on the basis of race and that enable a Minnesota
resident to fulfill state compulsory attendance laws.  /3/ The statute
has been in existence largely unchanged since 1955.  /4/

   2. Petitioners, two Minnesota taxpayers, filed this action in a
representative capacity against the Minnesota Commissioner of Revenue
in the United States District Court for the District of Minnesota,
seeking injunctive relief against enforcement of the statute.  /5/
They claimed that Minn. Stat. Ann. Section 290.09 (22) (West Cum.
Supp. 1982) violates the Establishment Clause of the First Amendment.
Two groups of taxpayers with children in nonpublic schools (both
sectarian and nonsectarian) intervened as defendants.  The district
court held that the deduction has a secular purpose and effect (Pet.
App. A-69 to A-78) and presents minimal danger of entangling the state
in religious affairs (id. at A-78 to A-80).  It accordingly granted
the defendant's motion for summary judgment.

   3. The court of appeals affirmed (Pet. App. A-1 to A-55).  Applying
the well-established test of Lemon v. Kurtzman, 403 U.S. 602 (1971),
the court "found no indicia of an invalid nonsecular purpose" (Pet.
App. A-16).  The court then turned to "the more difficult issue of
whether the tuition deduction has the primary effect of advancing
religion" (id. at A-36 to A-37).  It concluded that Minnesota's
deduction is different in significant respects from the form of aid
held unconstitutional in Committee For Public Education & Religious
Liberty v. Nyquist, 413 U.S. 756 (1973) ("Nyquist").  /6/ The court
noted that Minnesota's deduction is available to all parents, not just
private school parents (Pet. App. A-44 to A-46).  Parents of children
in private nonsectarian schools constituted some 14% to 18% of the
taxpayers qualifying for the deduction, and parents of children in
public schools paid more than $2 million in tuition expenses in
1978-1979 (id. at A-45 to A-46).  Moreover, unlike the "arbitrary"
allowance or, in some cases, direct payment of the sort provided in
Nyquist, the Minnesota tuition deduction operates more like the tax
deduction afforded by federal law for charitable contributions (id. at
A-46 to A-48).  Thus, the court held that the Minnesota statute is
similar to the laws upheld in Board of Education v. Allen, 392 U.S.
236 (1968), and Everson v. Board of Education, 330 U.S. 1 (1947),
which provided textbooks and transportation to all school children,
and to the tax exemption upheld in Walz v. Tax Commission, 397 U.S.
664 (1970), which extended benefits to a broad class of sectarian and
nonsectarian institutions (Pet. App. A-40 to A-42).  /7/

                          SUMMARY OF ARGUMENT

   Minnesota has long provided a state income tax deduction for a
broad array of educational expenses as part of an extensive system of
state and local support for education.  Viewed in this context, such a
legislative scheme is consistent with the principle of neutrality that
governs this Court's Establishment Clause jurisprudence.  A
legislative determination that money spent for such socially
beneficial purposes should not count toward a family's tax liability
is clearly permissible, and consistent with deductions provided for
other types of socially useful expenditures.  Notwithstanding clearly
legitimate secular bases for legislation, however, a state's
flexibility is necessarily circumscribed by the constitutional
prohibition against the establishment of religion.

   In assessing whether an otherwise neutral statute violates the
Establishment Clause, this Court has considered whether the statute
has a secular purpose;  whether its primary effect is to advance
religion;  and whether it fosters an excessive entanglement of
government with religion (Lemon v. Kurtzman, supra, 403 U.S. at
612-613).  That the Minnesota statute has a secular purpose cannot be
seriously challenged.  Nyquist, supra, 413 U.S. at 773.

   the Minnesota statute also does not have a primary effect of
advancing religion.  Unlike the New York statute invalidated in
Nyquist, the tax benefit here is not in the form of, or a substitute
for, a direct subsidy or reward for religious conduct.  While it is
true that a large portion of the tax benefits from the statute may
flow to families with children in sectarian schools, percentages alone
do not determine whether a law's primary effect is to advance
religion.  Also unlike Nyquist, the Minnesota law provides tax
benefits to all parents, whether their children attend public or
private school, for a broad array of educational expenses.

   Finally, a tax deduction for parents with tuition expenses does not
excessively entangle the government with religion.

                               ARGUMENT

 MINNESOTA'S tuition tax deduction DOES NOT VIOLATE THE ESTABLISHMENT
CLAUSE

   The task of this Court in accommodating "the internal tension in
the First Amendment between the Establishment Clause and the Free
Exercise Clause" is "to define the boundaries of the netural area
between these two provisions within which the legislature may
legitimately act." Tilton v. Richardson, 403 U.S. 672, 677 (1971)
(plurality opinion).  Clearly, the decisions of this Court "do not
call for total separation between church and state;  total separation
is not possible * * *." /8/ Thus, the separation between church and
state, "far from being a 'wall,' is a blurred, indistinct, and
variable barrier depending on all the circumstances of a particular
relationship." Lemon v. Kurtzman, supra, 403 U.S. at 614.

   Application of the neutrality principle in the area of state
assistance to nonpublic schools has been particularly difficult,
resulting in "lines that often must seem arbitrary." Wolman v. Wlater,
433 U.S. 229, 262 (1977) (Powell, J., concurring in part and
dissenting in part).  In Nyquist this Court said that the state must
"maintain an attitude of 'neutrality,' neither 'advancing' nor
'inhibiting' religion." 413 U.S. at 788.  The Minnesota deduction does
not "advance" religion.  It simply recognizes the costs borne by
taxpayers who elect to provide their children what the basic public
school system does not offer free of charge, and attempts to soften
the impact of those costs.  It falls well within the principle that
"there is room for play in the joints productive of a benevolent
neutrality * * *." Walz v. Tax Commission, supra, 397 U.S. at 669.

   The Establishment Clause has been interpreted to permit many laws
that provide indirect benefits to sectarian institutions, /9/ but
certain kinds of assistance are impermissible.  /10/ In distinguishing
between them this Court has asked whether the statute has a secular
purpose, whether its primary effect is to advance (or inhibit)
religion, and whether it fosters an excessive government entanglement
with religion.  /11/ But these "tests must not be viewed as setting
the precise limits to the necessary constitutional inquiry (;  they)
serve only as guidelines * * *." /12/

            A. The Minnesota Statute Has A Secular Purpose

   It is by now well-established that the states have a legitimate
secular interest in providing assistance to nonpublic schools.  /13/
Private schools, including religiously affiliated institutions,
provide an education to state residents who would otherwise be
entitled to attend public schools at local taxpayers' expense.  Hunt
v. McNair, 413 U.S. 734, 741-742 (1973).  The states are legitimately
concerned that their public school systems could become overburdened
if substantial numbers of private school students were forced to
enroll in public schools.  Nyquist, supra, 413 U.S. at 773.  Moreover,
the welfare of all state reisdents is enhanced by state programs that
endeavor to provide for all school children, including those attending
nonpublic schools, "a fertile educational environment," Wolman v.
Walter, supra, 433 U.S. at 236, and an "ample opportunity to develop
to the fullest their intellectual capacities." Meek v. Pittenger,
supra, 421 U.S. at 352 n.2.  In addition, this Court has recognized
the "propriety, and fully secular content," of a state's interest "in
promoting pluralism and diversity among its public and nonpublic
schools." Nyquist, supra, 413 U.S. at 773.  See also Roemer v. Board
of Public Works, supra, 426 U.S. at 754 (state statute "supporting
private higher education generally, as an economic alternative to a
wholly public system," has a secular purpose).

   In Nyquist this Court was presented with one of numerous attempts
by New York to provide direct benefits to parochial schools.  See 124
Cong. Rec. 8708 (1978) (testimony of Professor Scalia).  The Court
nonetheless recognized that a state statute aiding nonpublic schools
may have a secular purpose even if it has an impermissible "primary
effect" of aiding religion.  413 U.S. at 773-774.  See also Meek v.
Pittenger, supra, 421 U.S. at 363.  The court of appeals thus
correctly rejected petitioners' argument that Minn. Stat. Section
290.09(22) must necessarily have a nonsecular purpose if its effect is
to aid families with children attending religious schools (see Pet.
App. A-14).  No other evidence of a constitutionally impermissible
purpose has been adduced (see id. at A-69 to A-70).  /14/ Minnesota's
statute reflects the State's intent to exempt from taxation that
portion of all parents' income (below the deduction ceiling) devoted
to the education of their children.  As the court of appeals correctly
recognized (id. at A-16):

      The manifest purpose of the * * * statute is to provide all
      taxpayers a benefit which will operate to enhance the quality of
      education in both public and private schools.

 B. The Primary Effect of The Minnesota Statute is Neutral;  it Does
Not Advance Religion

   The effects test, like the overall test of which it is a part,
rests primarily on the requirement of governmental neutrality -- the
requirement that "no religion be approved or favored, none commended,
and none inhibited." Walz v. Tax Commission, supra, 397 U.S. at 669.
In determining the primary effect of a statute under the Establishment
Clause, this Court has looked to a number of factors.  The nature of
the benefit, the character of the recipient, and the intimacy of the
connection between the benefit and religious activity must all be
taken into account.  Also important is the breadth of the class
benefited by the statute.

   As the Eighth Circuit found in this case, the Minnesota statute in
question is different from the New York statutory scheme in Nyquist in
two significant respects.  The Minnesota statute operates as a true
deduction, unlike the tuition subsidy in Nyquist.  Moreover, the
statutory scheme here, unlike that in Nyquist, does not limit benefits
to parents of private school children (Pet. App. A-41).  Either of
these distinctions should be sufficient to uphold the Minnesota
statute.

 1. The Minnesota Tax Deduction Affords Only An Indirect And
Insubstantial Benefit To Religion

   The benefit accruing to religious institutions from Minnesota's tax
deduction is both indirect and insubstantial.  It neither appropriates
the income of taxpayers for religious functions, nor requires payments
to religious institutions.  Under these circumstances the law has no
"direct and immediate effect of advancing religion," but "only a
remote and incidental effect advantageous to religious institutions."
Nyquist, supra, 413 U.S. at 784 n.39.

   This Court has distinguished, for purposes of Establishment Clause
analysis, between different forms of financial benefits to religious
institutions.  In Walz v. Tax Commission, supra, for example, the
Court recognized that a tax exemption stood on a far different footing
than a direct monetary subsidy from the state to churches.  397 U.S.
at 675.  "'(I)n the case of a direct subsidy, the state forcibly
diverts the income of both believers and nonbelievers to churches'"
(id. at 690-691) (Brennan, J., concurring).  Tax exemptions, by
contrast, involve no such diversion of resources;  they "constitute
mere passive state involvement with religion" (ibid.).  /15/

   The Court has also recognized that there is a distinction between
providing benefits directly to religious institutions, and providing
benefits to individuals, some of whom belong to such institutions.
Lemon v. Kurtzman, supra, 403 U.S. at 621;  Meek v. Pittenger, supra,
421 U.S. at 360-361 (opinion of Stewart, J.).  Though not of decisive
significance, see Nyquist, supra, 413 U.S. at 781, this factor must be
considered for the obvious reason that the benefit may never be passed
on to the religious institution or put to religious use.  A tax
deduction for parents whose child would attend a sectarian school in
any event, for example, neither encourages religious conduct nor
increases the revenues of a religious institution.  /16/

   Moreover, far from encouraging religion the Minnesota deduction
simply lessens the disparity between the burdens borne by two classes
of state taxpayers.  Like other states, Minnesota provides extensive
support for a public school system which is properly, by
constitutional guarantee, nonreligious.  Viewed as one part of an
overall effort to support education, the deduction promotes neutrality
as between those who choose private and those who choose public
education for their children.

   Where grants have been provided directly to schools, this Court has
been careful to require that no support go to their religious
functions.  But assistance in the form of transportation, books, and
reimbursement for administration of tests may reduce costs, and
thereby increase enrollment, without running afoul of the
Establishment Clause.  What is important is the intimacy of the nexus
between state benefits and religious activity.

   In the case of a tax deduction given to parents in general for
education-related expenditures, the state's connection to religious
activities at sectarian schools is too remote to violate the
Establishment Clause.  Unlike an unrestricted grant to a sectarian
school or to parents, here the taxpayer is simply relieved of the
burden of paying some portion of taxes to the state.  It is true that
the tax deduction will offset to a degree money paid for tuition, and
that tuition payments in turn may be viewed as funding in an undivided
way both religious and secular functions of the school.  But the same
may be said of tax deductions for charitable contributions to churches
(26 U.S.C. 170(a), (b)(1)(A)(i) and (ii), since such contributions may
be used to fund religious services, or the purchase of religious
artifacts, or the publication of religious tracts.

   Petitioners nevertheless contend (Pet. Br. 20-32) that Minnesota's
deduction is unlike the exemption upheld in Walz, or the charitable
deduction permitted by Section 170, and like the tax credit held
invalid in Nyquist.  Petitioners assert that the tax exemption in Walz
was not a government subsidy to churches because the decision to
exempt religious property was simply a byproduct of the "inevitable
task of defining the tax base" (Pet. Br. 23 n.8).  But by the same
token, the exclusion of amounts paid for education can be seen as
merely a byproduct of the inevitable task of defining taxable income.
Minn. Stat. Section 290-09(22) permits taxpayers to exclude a wide
array of items -- including business expenses, medical expenses, and
alimony -- in addition to educational expenses.  The deduction of
these items from taxable income is no more a subsidy to businesses,
doctors, former spouses, or schools, than the exemption of property
owned by religious organizations from the tax base in Walz was a
subsidy to churches.

   Nor is petitioners' purported distinction of Section 170 any more
convincing.  They argue that Section 170 allows a deduction for
"voluntary contributions," made from "detached and disinterested
generosity" (Pet. Br. 23), whereas Section 290.09 involves "the
deductibility of * * * user fees paid by a taxpayer in return for a
specified service" (Pet. Br. 13).  The latter, they claim, is a
"direct government- subsidy" because the taxpayer -- who receives both
the service and a deduction -- ends up in an "economically positive
position in connection with the entire transaction." By contrast, the
Section 170 taxpayer, who receives no quid pro quo, "remains in an
economically negative position" even after the deduction (Pet. Br. 27
n.11).  But the suggested distinction is irrelevant for Establishment
Clause purposes.  If the Clause forbids the government to encourage
religious activity by the taxpayer, the encouragement offered by the
government in the two cases is identical:  assuming equal tax rates,
the government foregoes collection of the same amount of money from
one who pays $500 in tuition as it does from one who makes a $500
charitable contribution.  /17/ On the other hand, if the clause is
concerned about the effect of government conduct on religious
institutions, the deduction given in Section 170 may actually provide
a more objectionable form of aid.  If one focuses (as petitioners do)
on the balance sheet, the institution receiving a charitable
contribution ends up in an "economically positive position" because it
need not provide services in exchange for the contribution.  /18/

   Finally, contrary to petitioners' contention, the Minnesota statute
is different in significant ways from the New York law held invalid in
Nyquist.  One aspect of the scheme devised by New York was a provision
for the direct appropriation to low income families of an amount of
money unrelated to actual tuition expenses.  Interlocked with that was
a graduated system of tax relief

      unrelated to the amount of money actually expended by any parent
      on tuition * * *.  The formula is apparently the product of a
      legislative attempt to assure that each family would receive a
      carefully estimated net benefit, and that the tax benefit would
      be comparable to, and compatible with, the tuition grant for
      lower income families. * * * The only difference is that one
      parent receives an actual cash payment while the other is
      allowed to reduce by an arbitrary amount the sume he would
      otherwise be obliged to pay over to the State.

   413 U.S. at 790-791.  Under these circumstances the Court concluded
that -- although the law might have secular purposes as well (id. at
773) -- New York had acted from a desire to "reward (a parent) for
sending his children to nonpublic schools" (id. at 791).  The statute
had both the "purpose and inevitable effect * * * to aid and advance
those religious institutions" (id. at 793;  emphasis added).  /19/

   This case, by contrast, presents the kind of tax deduction whose
acceptability Nyquist declined to decide (413 U.S. at 790 n.49).
Section 290.09 permits taxpayers to deduct from gross income the
amount actually expended for tuition.  The education deduction
functions in precisely the same way as deductions for business
expenses, medical expenses, political and charitable contributions,
home mortgage interest payments, and so on.  It does not afford a
"predetermined amount of tax 'forgiveness' in exchange for performing
a specific act which the State desires to encourage" (413 U.S. at
789).  It simply represents a judgment by the state that income
devoted to any educational expense -- including tuition payments to
public schools for special programs, to private secular schools, and
to private sectarian schools -- should not be subjected to the burden
of taxation.  /20/

            2. The Minnesota Statute Benefits A Broad Class

   "The provision of benefits to (a) broad * * * spectrum of groups is
an important index of secular effect." Widmar v. Vincent, 454 U.S.
263, 274 (1981).  This Court has held that among the kinds of benefits
that may be allowed indirectly to accrue to sectarian schools are the
provision of transportation to and from school, and the furnishing of
textbooks, for all students.  Everson v. Board of Education, supra;
Board of Education v. Allen, supra.  "In both cases the class of
beneficiaries included all schoolchildren, those in public as well as
those in private schools." Nyquist, supra, 413 U.S. at 782 n.38
(emphasis in original).  See also Tilton v. Richardson, supra;  Walz
v. Tax Commission, supra;  Nyquist, supra, 413 U.S. at 782 n.38.  In
striking down tuition grants made available by New York only to
children attending private schools, the Court in Nyquist left open the
question "whether the significantly religious character of the
statute's beneficiaries might differentiate the present cases from a
case involving some form of public assistance (e.g. scholarships) made
available generally without regard to the sectarian-nonsectarian, or
public-nonpublic nature of the institution benefited" (id. at 783
n.38).  /21/

   Minn. Stat. Section 290.09(22) is quite different from the state
aid held invalid in Nyquist.  Minnesota's tax provision allows a
deduction for the educational expenses of all families with children
in elementary and secondary school, whether public or nonpublic.
While it is true that children attending public schools do not
commonly pay tuition in the ordinary sense, they may do so if they
attend school outside the district of their residence.  More
typically, public school students are faced with tuition charges for
summer school, or tutoring services provided by the school, or such
courses as driver education that may be included in the curriculum
(Pet. App. A-62 to A-64).  While the record does not reveal the number
of taxpayers claiming such deductions, there is no reason to assume
that it is small.  /22/ The statute is thus neutral in that it
provides a deduction (up to the amount of the statutory ceiling) for
all the expenses of educational instruction that parents may incur,
whether their children attend public school, private secular school,
or privact sectarian school.

   Petitioners nevertheless contend that the Minnesota statute is
unconstitutional because "the overwhelming bulk of the benefits"
accrues to parents with children in sectarian schools (Pet. Br. 37).
/23/ At the very least, they argue, the available statistics amount to
a prima facie case that deductions are disproportionately available to
such parents, and the State bears the burden of producing contrary
evidence and persuading the court of its accuracy (id. at 36-50).  It
is erroneous, however, to suppose that an Establishment Clause
violation can be deduced simply from the kind of statistical
computations advanced by petitioners, even if they are accurate.  More
than half of the charitable deductions taken under Sction 170 of the
Internal Revenue Code of 1954 (26 U.S.C.) are for contributions to
churches, Andrews, Personal Deductions in an Ideal Income Tax, 86
Harv. L. Rev. 309, 356 & n.79 (1972), yet this Court in Nyquist
specifically left open the question whether that and similar
deductions were consistent with the Establishment Clause "under the
'neutrality' test in Waltz." Nyquist, supra, 413 U.S. at 790 n.49.

   Neither the percentage /24/ nor the dollar amount of benefits /25/
should be a shibboleth for identifying Establishment Clause
violations.  As the court of appeals noted, it would be difficult to
justify a rule that would hold "the same statute * * * constitutional
one year, and not the next, or in one state and not in another,
depending upon the current statistical breakdown of sectarian and
nonsectarian schools" (Pet. App. A-30 n.13).  Rather, the "primary
effect" test in Lemon was designed to accommodate all laws that
achieve secular effects -- even in a religious context -- provided the
attendant benefit to religion is incidental and indirect.  See
Nyquist, supra, 413 U.S. at 783-785 n.39.  Regardless of the
percentage distribution or dollar amount, the provision of benefits to
a broad class affords significant assurance that any aid to religion
is not only indirect (see pages 11-17, supra) but also an incidental
byproduct of a secular legislative program.  In the first place, the
breadth of the class guarantees that the statutory effect is in fact,
secular, because it occurs outside as well as within a religious
context.  Here, as the court of appeals concluded (Pet. App. A-52),

      the State, in effect, abstains from taxing that income which has
      been denoted by a broad class of Minnesota citizens to their
      children's education.  In so doing, the State has adopted a
      policy which is neutral toward religion * * *.

   Moreover, inclusion of the religious within a broad class of
statutory beneficiaries guarantees that they receive no advantage
relative to secular recipients.  Indeed, to exclude those acting on
religious principles from enjoyment of benefits otherwise broadly
available could violate the Free Exercise Clause.  /26/ That the
average deduction claimed by parents of children attending sectarian
schools may exceed the average deduction claimed by parents of public
school children does not undermine this point.  Taxpayers are treated
neutrally by the statute in the sense that each may claim a deduction
for all tuition expenses up to the ceiling of $500 or $700.  The
decision to spend more or less on education rests with the taxpayer,
and the option of spending more is made no more attractive for the
religious than it is for the nonreligious.  It is true that religious
parents may choose private school in disproportionate numbers;  but
the choice results from religious impulse, and not from any relative
advantage afforded them by the law.  /27/

 C. The Minnesota Statute Does Not Foster Excessive Government
Entanglement With Religion

   In order for a statute to survive an Establishment Clause
challenge, it must not involve "an excessive government entanglement
with religion." Walz v. Tax Commission, supra, 397 U.S. at 674.  See
Lemon v. Kurtzman, supra, 403 U.S. at 612-613.  The tax deduction
provided by Minnesota involves no such entanglement.  /28/

   Minn. Stat. Section 290.09(22) creates no administrative
relationship between government and religion.  The statute provides
that families with children attending nonprofit schools, which meet
Minnesota's educational requirements and do not discriminate on the
basis of race, may deduct their educational expenses.  Thus, the only
interaction between the State and schools themselves is what is
necessary to determine compliance with educational, nonprofit, and
nondiscrimination requirements /29/ -- a level of involvement long
recognized as proper.  Pierce v. Society of Sisters, 268 U.S. 510, 534
(1925).  So long as those demands are met, interaction between the
State and the individual taxpayer in the course of an audit would be
limited to verification of tuition expenses.  That differs in no way
from the government's involvement with religion occasioned by the
review of charitable contributions under 26 U.S.C. 170.  As the court
of appeals correctly recognized, such "'church-state contacts
occasioned by normal tax administration procedures do not give rise to
excessive and unconstitutional government and religion entanglements.
See Walz, 397 U.S. at 674-76'" (Pet. App. A-35 to A-36).  /30/

                              CONCLUSION

   The judgment of the court of appeals should be affirmed.

   Respectfully submitted.

   REX E. LEE

      Solicitor General

   J. PAUL MCGRATH

      Assistant Attorney General

   CAROLYN B. KUHL

      Deputy Assistant Attorney General

   JOHN H. Garvey

      Assistant to the Solicitor General

   ROBERT E. KOPP

   MICHAEL F. HERTZ

   JENNY A. STERNBACH

      Attorneys

   FEBRUARY 1983

   /1/ The United States filed amicus curiae briefs in Committee for
Public Education & Religious Liberty v. Nyquist, 413 U.S. 756 (1973),
and Sloan v. Lemon, 413 U.S. 825 (1973), at a time when earlier
tuition tax relief bills were pending in Congress.

   /2/ The deduction is limited to actual expenditures up to $500 per
dependent in kindergarten through sixth grade, and $700 per dependent
in the seventh through twelfth grades.

   /3/ The district court found deductible tuition expenses to include
(Pet. App. A-62 to A-64):

   1. tuition in the ordinary sense;

   2. tuition charged to students who attend public schools outside
the districts where they reside;

   3. certain summer school tuition;

   4. tuition charged by a school for private tutoring services for
slow learners;

   5.tuition for instruction provided by an elementary or secondary
school to students who are physically unable to attend classes;

   6. tuition charged by a private tutor or by a school that is not an
elementary or secondary school if the instruction is acceptable for
credit in an elementary or secondary school;

   7. Montessori School tuition for grades K through 12;

   8. tuition for driver education when it is part of the curriculum.

   /4/ In 1976, the statute was amended to increase the maximum
deductible amounts from $200 to $500 and $700 and to add the cost of
textbooks as deductible expenses.  1976 Minn. Laws 93.  In 1978, an
amendment excluded deductions for certain extracurricular activities.
1978 Minn. Laws 1022.

   In 1971, Minnesota enacted a statute that provided an income tax
credit to parents who paid tuition and textbook expenses for their
children attending nonpublic schools, and who did not claim a
deduction under Minn. Stat. Ann. Section 290.09(22) (West Cum. Supp.
1982).  1971 Minn. Laws 1971.  The tax credit provision was held
unconstitutional on Establishment Clause grounds by the Supreme Court
of Minnesota.  Minnesota Civil Liberties Union v. State, 302 Minn.
216, 224 N.W.2d 344 (1974).

   /5/ Petitioners were joined as plaintiffs by three other
individuals, whose claims were dismissed by the district court as res
judicata (Pet. App. A-57 to A-58).  The three dismissed plaintiffs
were found to have had an interest in an earlier (nonrepresentative)
taxpayer action challenging the same law.  Minnesota Civil Liberties
Union v. Roemer, 452 F. Supp. 1316 (D. Minn. 1978).  In that case a
three-judge court upheld the law against an Establishment Clause
challenge.

   /6/ In Nyquist, this Court struck down a New York statute that
offered a subsidy to low-income parents who sent their children to
private schools, including sectarian schools, and a parallel tax
credit in similar amounts for families with incomes between $5,000 and
%25,000.  See 413 U.S. at 764-766 & nn.18, 19.

   /7/ In Walz, a long-standing law providing an exemption from real
estate taxes for property used for religious, educational, or
charitable purposes was found not to violate the Establishment Clause.

   The court of appeals also upheld provisions in the Minnesota law
that allow deductions for transportation (see Pet. App. A-6 to A-7
n.3) and textbooks (id. at A-7 & n.4).  Regarding the former, the
court said that, given the approval of direct state payment for
transportation in Everson v. Board of Education, supra, a deduction is
a fortiori permissible (Pet. App. A-30 to A-31).  For the same reason,
the court concluded that a deduction for textbooks was authorized by
Board of Education v. Allen, supra (Pet. App. A-31 to A-32).  The
court found slightly more difficult the statutory allowance of a
deduction for instructional materials, which this Court had held
cannot be loaned by the state to private schools either directly (Meek
v. Pittenger, 421 U.S. 349, 362-366 (1975)) or through parents (Wolman
v. Walter, 433 U.S. 229, 248-251 (1977)). It concluded, though, that
any benefit to religion in this case was considerably more indirect,
since what was at stake was a tax deduction for parents' purchases of
nonreligious materials for use by their children at school (Pet. App.
A-32 to A-35).  The Question Presented in the petition does not
expressly include a challenge to these portions of the court's
opinion.

   /8/ Lemon v. Kurtzman, supra, 403 U.S. at 614;  Roemer v. Board of
Public Works, 426 U.S. 736, 745-746 (1976);  Walz v. Tax Commission,
supra, 397 U.S. at 669.

   /9/ See, e.g., Widmar v. Vincent, 454 U.S. 263, 273 (1981);  Wolman
v. Walter, supra;  Roemer v. Board of Public Works, supra;  Hunt v.
McNair, 413 U.S. 734 (1973);  Tilton v. Richardson, supra;  Walz v.
Tax Commission, supra;  Board of Education v. Allen, supra;  Everson
v. Board of Education, supra.

   /10/ See, e.g., Meek v. Pittenger, supra;  Nyquist, supra;  Lemon
v. Kurtzman, supra.

   /11/ Lemon v. Kurtzman, supra, 403 U.S. at 612-613;  see also
Larkin v. Grendel's Den, Inc., No. 81-878 (Dec. 13, 1982), slip op. 7.
 Some cases have also considered whether the challenged law creates
the potential for political conflict along religious lines.  See
Wolman v. Walter, supra, 433 U.S. at 243 n.11;  Meek v. Pittenger,
supra, 421 U.S. at 372;  Nyquist, supra, 413 U.S. at 794;  Lemon v.
Kurtzman, supra, 403 U.S. at 622-623.

   /12/ Meek v. Pittenger, supra, 421 U.S. at 359.  See Nyquist,
supra, 413 U.S. at 773 n.31, quoting Tilton v. Richardson, supra, 403
U.S. at 677-678 ("there is no single constitutional caliper that can
be used to measure the precise degree" to which any of the
Establishment Clause tests is applicable to a particular legislative
enactment);  Wheeler v. Barrera, 417 U.S. 402, 426 (1974).

   /13/ See Roemer v. Board of Public Works, supra, 426 U.S. at 754;
Wolman v. Walter, supra, 433 U.S. at 236;  Meek v. Pittenger, supra,
421 U.S. at 363;  Hunt v. McNair, supra, 413 U.S. at 741-742;
Nyquist, supra, 413 U.S. at 773.

   /14/ If anything, Minn. Stat. Section 290.09(22) evidences an
intent to minimize whatever assistance, however indirect, the statute
may provide to the religious function of private schools.  The statute
provides that parents may deduct the cost of textbooks used by their
children only for subjects taught in public schools;  the deduction
"shall not include instructional books and materials used in the
teaching of religious tenets, doctrines or worship" (ibid.).  See
Wolman v. Walter, supra, 433 U.S. at 236 n.5 (a statute's secular
purpose is evidenced by provisions prohibiting use of services,
materials, or equipment in religious courses or activities).

   /15/ It appears from other contexts as well that this Court has not
regarded tax exemptions (or deductions) and appropriations as fungible
means of affording benefits to religious institutions.  The impact of
the former on federal taxpayers, for example, may be too insignificant
to satisfy the constitutional requirements for standing.  See Flast v.
Cohen, 392 U.S. 83, 102 (1968) (a federal taxpayer has standing to
complain only of Congress's exercise of its "power under the taxing
and spending clause of Art. I., Section 8") (emphasis added);  ibid.
("This requirement is consistent with the limitation imposed upon
state-taxpayer standing in federal courts");  Valley Forge Christian
College v. Americans United for Separation of Church & State, Inc.,
454 U.S. 464, 480 n.17 (1982).  Because the Establishment Clause rests
in large part on a concern that citizens not be required to lend their
support to religion, see Everson v. Board of Education, supra, 330
U.S. at 10-16, absence of the "injury in fact" required for
constitutional standing would support the conclusion that the
substantive requirements of the Clause are not violated when the
government simply refrains from taxing.

   /16/ To say that such a deduction necessarily "rewards" religious
conduct even though it does not affect the choice to engage in such
conduct is to confuse the purpose and effect strands of the Lemon
test.  The Minnesota deduction does not necessarily reward religious
conduct any more than a medical expense deduction rewards people for
seeking medical services.  The difference between the two kinds of
deductions is that the former, unlike the latter, would be
unconstitutional if the legislature's motive for enacting it were to
favor religious taxpayers.  As noted above, however, the Minnesota
statute plainly has a secular purpose.

   /17/ If the distinction offered by petitioners is meant to suggest
that government encouragement will more likely be effective in the
case of a "user fee" (because the taxpayer already has an economic
incentive to engage in the favored transaction), it ignores the
obvious fact that people act from noneconomic motives as well.
Indeed, it is likely that those who seek religious education for their
children are actuated by noneconomic motives in much the same way as
are those who make charitable contributions to religious
organizations.

   /18/ Petitioners also suggest that the Minnesota deduction, unlike
a "genuine tax deduction" (Pet. Br. 30), is available only for a
"narrowly defined activity" (id. at 23, 24, 25), and only to a narrow
group of claimants (id. at 30).  But a deduction for theft losses (see
Pet. Br. App. A, Schedule A) is none the less "genuine" for being
available only in narrow circumstances.  The relevant question for
Establishment Clause purposes is not how many kinds of activities are
deductible on a particular line of an income tax return, but whether
the deductions allowed have a secular purpose and effect.  It is true
that the availability of any particular deduction to both religious
and nonreligious taxpayers provides assurance that those requirements
are satisfied, but as we argue below, pages 18-22, the Minnesota
statute affords that assurance.

   /19/ See also 413 U.S. at 791 ("'the money involved represents a
charge made upon the state for the purpose of religious education'")
(emphasis added);  id. at 793 (unlike New York's tuition tax relief,
the aid in Walz was not a product "of any purpose to support or to
subsidize") (emphasis added).

   /20/ Petitioners also rely (Pet. Br. 26) on several cases summarily
affirmed by this Court for the proposition that deductions for "user
fees" inevitably act as government subsidies for religious activities.
 In one of those cases, Kosydar v. Wolman, 353 F. Supp. 744 (S.D. Ohio
1972), aff'd mem., 413 U.S. 901 (1973), the state provided a
dollar-for-dollar tax "credit" for nonpublic school parents and a
narrow class of other claimants.  353 F. Supp. at 750, 760.  If the
total "credit" to which a parent was entitled exceeded his income tax
liability, the statute provided a refund to the taxpayer, payable out
of a special fund and capped by the sum of the sales, excise, and
property taxes paid during the tax year (id. at 750).  The law was
thus identical in effect to the New York statute addressed in Nyquist
-- both involved a combination reimbursement/credit scheme designed to
give "each family * * * a carefully estimated net benefit * * *."
Nyquist, supra, 413 U.S. at 790.

   In Public Funds for Public Schools v. Byrne, 590 F.2d 514 (3d
Cir.), aff'd mem., 442 U.S. 907 (1979), the state provided a $1000 tax
exemption only to parents of children in private school, and
regardless of actual expenditures.  590 F.2d at 516.  Thus, not only
was the tax relief available -- unlike Minnesota's -- only to a narrow
class, but it could in theory result in a tax saving exceeding a
taxpayer's expenditures for parochial school.

   /21/ In defining the breadth of the class benefited, the Court
should also consider the larger context in which a particular form of
public assistance plays a role.  Federal tax relief for tuition
payments, for example, would be merely one strand in a larger complex
of programs designed to enhance the quality of public and nonpublic
education alike.

   /22/ We are informed by the State of Minnesota that deductions were
claimed on behalf of 204,670 dependents on 1980 returns.  (The number
of nonpublic school students in 1979-1980 was 90,954.  J.A. A33).
Nearly half of the deductions were in amounts of $200 or less.  The
state does not break deductions down among tuition, books, and
transportation.

   /23/ The cases relied upon by petitioners in support of this
proposition (Pet. Br. 40-41) are inapposite.  Most of those cases
involved benefits, usually in the form of direct cash grants, made
available only to parents of children in nonpublic schools.  Public
Funds for Public Schools v. Byrne, supra, 590 F.2d at 516 ($1000
exemption for parents of nonpublic school children);  Public Funds for
Public Schools v. Marburger, 358 F. Supp. 29, 31 (D.N.J. 1973), aff'd
mem., 417 U.S. 961 (1974) (grants of $20-$20 to parents of nonpublic
school children);  Sloan v. Lemon, supra, 413 U.S. at 828-829 (grants
of $75-$150 to parents of nonpublic school children);  Nyquist, supra,
413 U.S. at 764-767 (grants of $50-$100 and parallel tax credits for
parents of nonpublic school children).  Cf. Kosydar v. Wolman, supra,
353 F. Supp. at 750, 760 (credit/reimbursement scheme for parents of
nonpublic school children and a narrow class of public school
parents);  United Americans for Public Schools v. Franchise Tax Board,
No. C-73-0090 (N.D. Cal.), aff'd mem., 419 U.S. 890 (1974) (credit of
$125 for parents of nonpublic school children).

   The remaining cases involved direct payments to nonpublic schools
themselves for services or materials that, though available in public
schools as well, would inevitably be intertwined with the religious
mission of parochial schools.  Levitt v. Committee for Public
Education & Religious Liberty, 413 U.S. 472, 479-480 (1973)
(reimbursement of nonpublic schools for test administration, etc.);
Lemon v. Kurtzman, supra, 403 U.S. at 607-610 (salary supplements for
nonpublic school teachers, payments to schools for performance of
secular services).  Cf. Wolman v. Walter, supra, 433 U.S. at 250-255
(grant in kind of materials, provision of field trips, to children in
nonpublic schools).

   /24/ In Nyquist the Court refrained from "intimating whether this
factor alone might have controlling significance * * *." 413 U.S. at
794.

   /25/ In Wolman v. Walter, supra, 433 U.S. at 233, the biennial
appropriation for nonpublic school aid under a state statute sustained
in large part by this Court was $88 million.  Petitioners have
estimated that the deductions taken under Minn. Stat. Section
290.09(22) result in a revenue loss of approximately $2.4 million
(Pet. App. A-18).

   /26/ Thomas v. Review Board of the Indiana Employment Security
Division, 450 U.S. 707 (1981);  Sherbert v. Verner, 374 U.S. 398
(1963);  Everson v. Board of Education, supra, 330 U.S. at 16 ("New
Jersey * * * cannot exclude * * * members of any * * * faith, because
of their faith, * * * from receiving the benefits of public welfare
legislation") (emphasis in original).  But cf. Sloan v. Lemon, supra,
413 U.S. at 834 (equal protection).

   /27/ It is of course true that the choice to attend a sectarian
school is made easier by the deduction, just as it is by
state-supplied books or transportation.  The point made in text is
simply that a law does not confer a relative advantage on religion
simply because religious parents claim its benefits in greater
numbers.  Such a law is thus consistent with "the 'neutrality' test in
Walz." Nyquist, supra, 413 U.S. at 790 n.49.

   /28/ In Nyquist, the Court did not reach the question whether the
tuition grant and tax relief provisions of New York's statute would
result in an unacceptable entanglement of the state with religion.
413 U.S. at 794.

   /29/ Closer state scrutiny may be necessary to enforce the
requirement that no deduction be taken for "instructional books and
materials used in the teaching of religious tenets, doctrines or
worship, the purpose of which is to inculcate such tenets, doctrines
or worship * * *." Minn. Stat. Section 290.09(22).  But the
determination of such questions in the course of individual audits is
not the kind of "comprehensive, discriminating, and continuing state
surveillance" of religion that Lemon found objectionable.  403 U.S. at
619.  And in any event, such a decision is not significantly different
from the determination -- required by the New York law upheld in Walz
(397 U.S. at 667 n.1) -- that property be "used exclusively for
carrying out" exempt purposes.

   /30/ In addition to the three-part test developed in Lemon v.
Kurtzman, supra, the Court has in some cases asked whether a statute
challenged under the Establishment Clause has the potential to create
political fragmentation along religious lines.  It is doubtful whether
that potential, though it may serve as a "warning signal," suffices to
invalidate a statute otherwise constitutional.  Nyquist, supra, 413
U.S. at 797-798.  In any event, the concern has properly been limited
to statutes of the type considered in Lemon, which require annual
appropriations.  Committee For Public Education & Religious Liberty v.
Regan, 444 U.S. 646, 661 n.8 (1980).

   Minnesota's law, unlike the grants in Lemon and the credit (linked
to grants) in Nyquist, provides a self-executing deduction program
requiring no further action by the legislature.  Cf. Walz v. Tax
Commission, supra, 397 U.S. at 698-699 (opinion of Harlan, J.)
Moreover, the fact that Minnesota's statute extends benefits to all
families with children in school, whether public or nonpublic,
decreases any likelihood of conflict along religious lines.  See
Nyquist, supra, 413 U.S. at 794 ("in terms of the potential
divisiveness * * * the narrowness of the benefited class would be an
important factor").