The question seems arcane — Is a tax credit the same as a tax deduction? — but a Georgia Supreme Court ruling on that question could help determine whether more than 13,000 students in elementary through high school continue to get state subsidized tuition to attend private schools.
A long-simmering lawsuit against the state’s tax credit scholarship program got a hearing in Georgia’s high court Monday, when lawyers argued whether the $58 million program violates a constitutional mandate for the separation of church and state.
Raymond Gaddy and other taxpayers sued in Fulton County Superior Court in 2014, alleging the program is unconstitutional because some schools that receive the money are religious institutions. Last year, the Fulton judge, Kimberly Esmond, dismissed all but one of Gaddy’s claims, prompting his appeal.
The defendant, the Georgia Department of Revenue, also appealed, but only over the judge’s decision to allow a trial on a narrow issue: Gaddy’s claim that the agency had failed to enforce a legal mandate prohibiting contributions for specific students.
The program works like this: Taxpayers pledge money — up to $1,000 for an individual, $2,500 per married couple and many thousands of dollars for certain business entities — to specific private schools and get a tax credit for the amount. The money goes indirectly to schools through nonprofit scholarship organizations that collect the donations. Taxpayers can select which school gets the money but not which student.
The outcome of the revenue agency’s appeal would likely have a limited effect, but the high court’s decision on Gaddy’s appeal could threaten the whole program, which in 2015 provided scholarships for 13,555 students, according to the latest figures from the revenue department.
Gaddy’s case revolves around a paragraph in the state constitution that prohibits use of public money to aid any church or other religious group.
The tax credit program subsidizes tuition at private schools, “many of which are religious in nature and require strict adherence to religious beliefs,” using “money that would otherwise go to the state,” Gaddy’s attorney, William Whitner, said, calling it a clear violation of the constitution.
A key issue for at least one of the justices, though, appeared to be whether a tax credit is the same as public money.
Justice David Nahmias said it’s not, “unless your theory is that the government owns all of my money to start with and only gives me the benefit of not paying taxes through deductions or credits.”
Arguing for the state, Alex Sponseller, with the attorney general’s office, likened the tax credits to another tax write-off with a long history and no prohibition on benefits to religious institutions: “There’s very little distinction between a tax credit and a deduction” for a donation, he said.
It typically takes half a year for the high court to reach a decision. Before deciding whether the tax credits are unconstitutional, it must decide other core issues, like whether Gaddy, as a taxpayer, has legal standing to sue or whether the state can even be sued on this matter because of what’s called “sovereign immunity.”
Robin Lamp, a single mother of two who watched the hearing in person, said tax credit-based scholarships allowed her to move her two daughters from public school in Henry County, where she said her eldest, Haley, had fallen behind in math and English. Haley Lamp, now 20 and studying nursing in college, said the smaller class sizes at Eagle’s Landing Christian Academy — and the knowledge that her teachers prayed for her — helped her excel in those subjects.
“You knew from day one that they were on your side and there were rooting you on,” she said, “as opposed to just shoving them across the finish line and hoping.”
Carolyn Wood, co-founder of the group Public Education Matters Georgia, has lobbied against expanding the program because, she said, it benefits a few at the expense of many. The money for the scholarships could be going to public schools, which are responsible for educating 1.7 million students and have endured years of budget cuts, she said.
“Our goal in Georgia should be to provide a quality education to every student,” she said. “We shouldn’t be picking winners and losers.”