Opinion ID: 778880
Heading Depth: 3
Heading Rank: 3

Heading: Nature of the Aid

Text: 55 Lipscomb University contends that the bonds represent indirect aid of the type the Supreme Court upheld in Walz v. Tax Commission, 397 U.S. 664, 90 S.Ct. 1409, 25 L.Ed.2d 697 (1970). The Walz Court held that a statute which provided a tax exemption for real estate owned by religious organizations did not represent an unconstitutional governmental attempt to establish, sponsor, or support religion. In language pertinent to this appeal, the Supreme Court noted: 56 The grant of a tax exemption is not sponsorship since the government does not transfer part of its revenues to churches but simply abstains from demanding that the church support the state. 57 Id. at 675, 90 S.Ct. 1409. The Supreme Court concluded that [t]here is no genuine nexus between tax exemption and establishment of religion. Id. 58 Subsequently, the Court made clear that an indirect financial benefit conferred by a religiously neutral tax does not give rise to an Establishment Clause violation. In Mueller v. Allen, 463 U.S. 388, 103 S.Ct. 3062, 77 L.Ed.2d 721 (1983), the Court upheld a tax deduction for amounts paid as school tuition, text books, and transportation. 6 The Court acknowledged that religious institutions benefit very substantially from the allowance of this kind of tax deduction. Id. at 396 n. 5, 103 S.Ct. 3062. The Court found that both parents and parochial schools received a benefit, and the assistance ultimately has an economic effect comparable to that of aid given directly to the schools attended by the children. Id. at 399, 103 S.Ct. 3062. Irrespective of this benefit, the Court acknowledged its decisions consistently have recognized that traditionally `[legislatures] have especially broad latitude in creating classifications and distinctions in tax statutes,' Regan v. Taxation With Representation of Wash., 461 U.S. 540, 547, 103 S.Ct. 1997, 76 L.Ed.2d 129 (1983), in part because the `familiarity with local conditions' enjoyed by legislators especially enables them to `achieve an equitable distribution of the tax burden.' Madden v. Kentucky, 309 U.S. 83, 88, 60 S.Ct. 406, 84 L.Ed. 590 (1940). Id. at 396, 103 S.Ct. 3062. Thus, a religious school's receipt of indirect benefits through a tax deduction does not require the conclusion that such provisions of a state's tax law violate the Establishment Clause. Id. at 396, 103 S.Ct. 3062. As long as the tax benefit is neutrally available, 7 the Establishment Clause is not violated. 59 The only evidence of record is that similar bonds have been issued to both religious and non-religious institutions in a neutral manner. The financing in question has been made available to colleges and universities in Metro, as well as throughout Tennessee and the United States, and has been provided to a number of colleges and universities with different kinds of religious affiliations, and those without any religious affiliation. 60 In Mueller, the Supreme Court distinguished its holding in Nyquist v. Committee for Public Education and Religious Liberty, 413 U.S. 756, 93 S.Ct. 2955, 37 L.Ed.2d 948 (1973). In Nyquist, the state legislation at issue included a wide range of government financial assistance in aid of private, predominately parochial education. State money was directed for maintenance and repair of private schools. In addition, the legislation provided for both direct tuition grants and tax credits payable to parents whose children attended private schools. In Mueller, the Court noted that the outright grants in Nyquist were fundamentally different from tax deductions given to all parents of public and private school students for education related expenses. 463 U.S. at 396 n. 6, 103 S.Ct. 3062. Further, unlike the deductions approved in Mueller, the deductions at issue in Nyquist were not based on actual expenses incurred. Instead, the deductible amounts were estimated and designed to equal the dollar amount of the direct aid in the form of tuition grants available only to low income families. Id. The Court concluded that these grants did not take the form of ordinary tax benefits and constituted direct aid to religious schools. 61 In Hernandez v. Commissioner of Internal Revenue, 490 U.S. 680, 688, 109 S.Ct. 2136, 104 L.Ed.2d 766 (1989), the Court held provisions of the Internal Revenue Code permitting federal taxpayers to deduct gifts or contributions made to a variety of charitable organizations, including purely religious groups did not violate the Establishment Clause. In Hernandez, members of the Church of Scientology contended that the First Amendment prevented the IRS from deeming obligatory payments for attendance of auditing sessions as something other than a charitable contribution. Id. at 680, 109 S.Ct. 2136. The IRS contended that a mandatory payment to the church for auditing and training was not a gift, but rather a quid pro quo payment for services received and therefore not deductable. The Church of Scientology contended that the disallowance of such payments as charitable deductions violated the Establishment Clause, inter alia, by creating excessive entanglement between church and state. The Supreme Court found no excessive entanglement and, in language pertinent to the issue before this Court, stated that routine regulatory interaction which involves no inquiries into religious doctrine ... no delegation of state power to a religious body ... and no `detailed monitoring and close administrative contact' between secular and religious bodies ... does not of itself violate the non entanglement command. Id. at 696-97, 109 S.Ct. 2136 (internal citations omitted). 62 Most recently, in Zelman v. Simmons-Harris, ___ U.S. at ___, 122 S.Ct. 2460, 153 L.Ed.2d 604 (2002), the Supreme Court again distinguished its holding in Nyquist. The Zelman Court found that the school voucher program in Ohio did not violate the Establishment Clause. The Court found that the program was controlled by its holdings in Mueller, Witters, and Zobrest. As to Nyquist the Court held: 63 To the extent the scope of Nyquist has remained an open question in light of these later decisions, we now hold that Nyquist does not govern neutral educational assistance programs that, like the program here, offer aid directly to a broad class of individual recipients defined without regard to religion. 64 Zelman, 122 S.Ct. at 2472.. 65 In a concurring opinion in Zelman, Justice O'Connor explained that a government program is not constitutionally infirm solely because a substantial benefit is conferred on a religious organization. 122 S.Ct. at 2473 (O'Connor, J. concurrence). She explained: 66 Although $8.2 million is no small sum, it pales in comparison to the amount of funds that federal, state, and local governments already provide religious institutions. Religious organizations may qualify for exemptions from the federal corporate income tax, see 26 U.S.C. § 501(c)(3); the corporate income tax in many States, see, e.g., Cal. Rev. & Tax. Code Ann. § 23701d (West 1992); and property taxes in all 50 States, see K. Turner, Property Tax Exemptions for Nonprofits, 12-Oct. Probate and Property 25 (1998); and clergy qualify for a federal tax break on income used for housing expenses, 26 U.S.C. § 1402(a)(8). In addition, the Federal Government provides individuals, corporations, trusts, and estates a tax deduction for charitable contributions to qualified religious groups. See §§ 170, 642(c). Finally, the Federal Government and certain state governments provide tax credits for educational expenses, many of which are spent on education at religious schools. See, e.g., § 25A (Hope tax credit); Minn.Stat. § 290.0674 (Supp.2001). 67 Most of these tax policies are well established, see, e.g., Mueller v. Allen, 463 U.S. 388, 103 S.Ct. 3062, 77 L.Ed.2d 721 (1983) (upholding Minnesota tax deduction for educational expenses); Walz v. Tax Comm'n of City of New York, 397 U.S. 664, 90 S.Ct. 1409, 25 L.Ed.2d 697 (1970) (upholding an exemption for religious organizations from New York property tax), yet confer a significant relative benefit on religious institutions. The state property tax exemptions for religious institutions alone amount to very large sums annually. 68 Id. (parallel citations omitted). 69 Similar to the benefits at issue in Walz, Mueller, Hernandez, and now, Zelman, the bonds at issue in this case are analogous to an indirect financial benefit conferred by a religiously neutral tax or deduction.