For a sense of some of what is at stake in the 2012 presidential and Senate elections, have a look at the Supreme Court's 5-4 opinion rejecting a constitutional challenge to an Arizona program that gives tax credits to those who support "school tuition organizations," which grant scholarships to private schools, including religious schools. From the majority position, by Justice Kennedy, which also attracted Justices Roberts, Scalia, Thomas, and Alito, while Justices Kagan, Ginsburg, Breyer, and Sotomayor dissented: "Like contributions that lead to charitable tax deductions, contributions yielding STO tax credits are not owed to the State and, in fact, pass directly from tax payers to private organizations. Respondents' contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector's hands. That premise finds no basis in standing jurisprudence. Private bank accounts cannot be equated with the Arizona State Treasury."
The case is mainly about who has standing to sue rather than about the underlying issue of support for religious schools, but it's an illuminating division nonetheless.
Justice Kagan's dissent responds to the majority's argument: "Taxpayers experience the same injury for standing purposes whether government subsidization of religion takes the form of a cash grant or a tax measure. The only rationale the majority offers for its newfound distinction—that grants, but not tax expenditures, somehow come from a complaining taxpayer's own wallet—cannot bear the weight the Court places on it." Justice Kagan also goes into TARP to support her point:
Our taxpayer standing cases have declined to distinguish between appropriations and tax expenditures for a simple reason: Here, as in many contexts, the distinction is one in search of a difference. To begin to see why, con- sider an example far afield from Flast and, indeed, from religion. Imagine that the Federal Government decides it should pay hundreds of billions of dollars to insolvent banks in the midst of a financial crisis. Suppose, too, that many millions of taxpayers oppose this bailout on the ground (whether right or wrong is immaterial) that it uses their hard-earned money to reward irresponsible business behavior. In the face of this hostility, some Members of Congress make the following proposal: Rather than give the money to banks via appropriations, the Government will allow banks to subtract the exact same amount from the tax bill they would otherwise have to pay to the U. S. Treasury. Would this proposal calm the furor? Or would most taxpayers respond by saying that a subsidy is a subsidy (or a bailout is a bailout), whether accomplished by the one means or by the other? Surely the latter; indeed, we would think the less of our countrymen if they failed to see through this cynical proposal.
Justice Kagan's opinion — joined by the other two Jews on the court — also engages in a hypothetical relating to Jews: "Suppose a State desires to reward Jews—by, say, $500 per year—for their religious devotion. Should the nature of taxpayers' concern vary if the State allows Jews to claim the aid on their tax returns, in lieu of receiving an annual stipend?"
