The U.S. Supreme Court heard oral arguments last week in Mueller v. Allen, a constitutional challenge to a Minnesota law that allows parents to take a state-income-tax deduction for some expenses incurred by dependents attending either public or private schools.
The law in question--part of the Minnesota Income Tax Statutes--has allowed state taxpayers since 1955 to claim income-tax deductions for tuition, nonreligious textbooks, transportation costs, and basic supplies.
The maximum allowable deduction has changed over the years; today, it is $500 for elementary-school students and $700 for secondary students.
The law applies only to parents with children in nonprofit schools that meet state compulsory-attendance laws and comply with federal civil-rights laws.
For fiscal 1984, the Minnesota Department of Revenue is estimating a projected cost to the state, in the form of claimed deductions, of $5.4 million.
“There is no way to know how this breaks down” between public- and private-school parents, said Carole Wald, a research analyst in the department.
Establishment Clause
A group of Minnesota taxpayers is contending that the law violates the Establishment Clause of the U.S. Constitution.
In 1981, a federal district court dismissed this complaint, and last April, the U.S. Court of Appeals for the Eighth Circuit ruled that the law did not violate the Establishment Clause, partly because it provides benefits for both public- and private-school parents.
In 1978, a three-judge federal district court in Minnesota upheld the same law in Minnesota Civil Liberties Union v. Roemer.
On several occasions, the Supreme Court has ruled on the constitutionality of laws that allow state tax benefits to the parents of private-school students.
The major precedent for the Mueller case is a 1973 case called Committee for Public Education and Religious Liberty v. Nyquist, in which the Court struck down a New York law that extended tax credits to parents of children enrolled in private schools.
The state has contended--and the lower courts have agreed--that Minnesota’s tax-deduction law differs from the system struck down in Nyquist in two significant ways:
First, the state contends, the Minnesota deduction is “neutral” because it is available to parents of both public- and private-school students. Second, Minnesota taxpayers receive a deduction that is based on the amount they actually pay for education, while New York allowed what amounted to a tax credit that was not directly tied to tuition costs.
“This is the first case that’s dealt with a true tax-deduction statute,” said Andrew J. Eisenzimmer, a lawyer who has worked on the side of the state.
However, William I. Kampf, the lawyer arguing against the law, said last week that despite its apparent “neutrality,” the law in practice primarily benefits private-school parents.
“The effect of the statute is the same as in Nyquist,” Mr. Kampf argued.
Limited Benefits
A pretrial brief filed with the Court says: “Despite the apparent facial neutrality of the statute, the record makes clear that benefits actually flowing to taxpayers with children in the public school are extremely limited.”
This is so, the brief states, because Minnesota public-school districts are “generally forbidden by law” to charge tuition. Of the 815,155 students attending public schools in 1978-79, only 79 were charged tuition.
Mr. Kampf said that most of the law’s benefits go to private-school parents (90,954 Minnesota children were enrolled in tuition-charging nonpublic schools in 1979-80, according to the brief).
He also said that because “over 95 percent” of Minnesota’s private-school students attend sectarian schools whose primary purpose is to ''inculcate religion,” the law is “disproportionately and overwhelming skewed” in their favor, and therefore violates the Constitution.
The group opposing Minnesota’s law is also asking the Court to resolve what it calls a “conflict” between the Eighth Circuit opinion and the 1980 decision by the U.S. Court of Appeals for the First Circuit that struck down an “identical” statute in the case, Rhode Island Federation of Teachers v. Norberg--a case the Supreme Court declined to review.
The Eighth Circuit acknowledged this conflict in its decision, and invited the Court to settle the matter.
The state says the “conflict” arose from the different “findings of fact” in the two cases. The court in Norberg found that the majority of tax-payers “eligible” for the deduction were those with children in sectarian schools--a conclusion that the state contends would not be correct under Minnesota law.
Minnesota is asking the Court to affirm the appeals-court ruling, arguing that the statute is applicable to all taxpayers and therefore neutral; that it has a secular legislative purpose; and that it is free of any entanglement between government and religion.
Neutrality Demand
“The central demand of the Establishment Clause is neutrality ... ,’' the state’s brief says.
“Establishment policy does not require that religious organizations be isolated from benefits available to the general citizenry. Thus, this Court has never struck down any provision, such as the one here, which applies to the entire class of taxpayer-parents of schoolchildren.”
The Reagan Administration, the United States Catholic Conference, and the Mountain States Legal Foundation, among others, have filed friend-of-the-court briefs in support of Minnesota.
The aclu, the National School Boards Association, Americans United for Separation of Church and State, the Baptist Joint Committee on Public Affairs, and the National Parent Teacher Association are among the groups that have filed briefs in support on the petitioners.
