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Scholarship Tax Credit Attracts A Crowd To N.H. Supreme Court

NHPR Staff

 A program that allows businesses to claim an 85% tax credit for donations made to private school  scholarship organizations had its day before the State Supreme Court Wednesday.

A lower court ruled last year that it would be unconstitutional for the program to give scholarships to private schools, because the tax credits amount to public dollars.

Proponents of the law argue that money diverted from the state’s coffers is not equivalent to money spent by the state, and even if it were, because that money is spent according to the wishes of parents, it’s not the same as the state giving support to a religious school.

“The credit is being received by the business, who donates that money to a scholarship organization. At that point the business owner cannot direct that money,” argued Associate Attorney General Richard Head. He went on to quote the US Supreme court in a 1983 case from Minnesota, “Numerous private choices are being made and the money flows to the parent and the students.”

Alex Luchenitser for Americans United for the Separation of Church and State led the group arguing against the tax credit, which included the American Civil Liberties Union. That group argued this program does indeed constitute the use of public money, in a way that tax exemptions, or charitable deductions does not.

“It affirmatively aids religious schools and at the same time it takes money away from a particular purpose – public schools – and it does so through a complex government program with lots of rules and regulations,” argued Luchenitser before the court.

Packed Hall

Extra benches had to be brought into the hearing room because of interest in this case. The state’s only scholarship organization, the Network for Education, packed the house, and conservative and libertarian activists, religious school headmasters, and families who hope to receive scholarships all rallied on the steps of the court before the hearing.

“My husband and I, we simply can’t afford the better schools,” said Michelle Alexis from Nashua, who hopes to send one of her children to Bishop Guertin high school, “but I know I have a quality student.”

The parties challenging the law, like the ACLU, say families should be free to send their children to private schools, but business tax receipts shouldn’t be diminished to help them do so.

Main Stage

It was clear from the start that this dispute would not be resolved until it was heard in higher court. Several times during the hearing in the Strafford county superior court, Judge John Lewis intimated that he could not over-rule several New Hampshire Supreme Court “Opinions of the Justices”, which establish a precedent for considering tax credits to be public money.

These informal opinions are not full cases and are written in response to requests from the legislature. Several times these “OJs” were brought up in the hearing, and the question was how much weight they should be given.

“Usually the court follows them,” said Luchenitser, outside the courthouse after the trial, “So that the court’s opinions can give guidance to state officials and citizens of the state, the court shouldn’t just overrule them unless there’s an absolutely compelling cause to do so.”

At the same time there is a similarly robust jurisprudence that supports the idea that tax credits are not public dollars, but it is at the level of the US Supreme Court. In 2011 a very similar program in Arizona, which the New Hampshire statute was based upon, was upheld by the highest court of the land.

The question is whether the judges in the Granite State will look back to its own decisions, or up to the federal courts, when it comes to its conclusions.

Sam Evans-Brown has been working for New Hampshire Public Radio since 2010, when he began as a freelancer. He shifted gears in 2016 and began producing Outside/In, a podcast and radio show about “the natural world and how we use it.” His work has won him several awards, including two regional Edward R. Murrow awards, one national Murrow, and the Overseas Press Club of America's award for best environmental reporting in any medium. He studied Politics and Spanish at Bates College, and before reporting was variously employed as a Spanish teacher, farmer, bicycle mechanic, ski coach, research assistant, a wilderness trip leader and a technical supporter.
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