The governor of New Hampshire just submitted an amicus brief in the lawsuit against the “Live Free or Die” state’s scholarship tax credit program. Last year, Governor Maggie Hassan unsuccessfully sought its repeal. The brief offers nothing new in the way of legal arguments. As with the ACLU and, unfortunately, the trial court judge, the governor’s brief tries to imagine a constitutional difference between tax credits and tax deductions and absurdly assumes that money that a private corporation donated to a private nonprofit that financially assists private citizens sending their children to private schools is somehow “public” money because the state could have collected it in taxes had the legislature so decided. This claim contradicts both logic and the U.S. Supreme Court’s holding in ACSTO v. Winn:
Like contributions that lead to charitable tax deductions, contributions yielding [scholarship] tax credits are not owed to the State and, in fact, pass directly from taxpayers 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 … State Treasury.
The Cato Institute submitted an amicus brief defending the constitutionality of the program back in November.
What’s noteworthy here is not the legal reasoning, but the governor’s chutzpah. First, as the Union Leader noted, “Hassan is pushing state‐funded, need‐based scholarships for college students while trying to eliminate need‐based scholarships for students in grades K-12.” The governor’s amicus brief does not explain why direct public expenditures that students can use at a Catholic college are perfectly constitutional but a low‐income student using a tax‐credit scholarships at a religious elementary or secondary school would, as her amicus brief melodramatically puts it, “jeopardize both the hallowed underpinnings of religious tolerance and freedom, and the prohibition against entanglement made sacred by [the] New Hampshire Constitution.”
Second, Hassan is a strong proponent of “research and development” tax credits that pick winners and losers among certain types of businesses and business activities, thereby distorting the market. Moreover, by the governor’s faulty logic, these tax credits constitute direct subsidies of public funds to profit‐seeking entities. R&D tax credits clearly reduce state revenue to fund activities that businesses are generally doing anyway for their own financial self‐interest.
By contrast, scholarship tax credits expand the market for private education without distorting it. Parents pick winners and losers among schools rather than the government. The corporations who receive the 85 percent tax credits do not benefit financially — indeed, they’d be better off financially had they not donated at all. Moreover, the Josiah Bartlett Center projected that, if fully utilized, the scholarship tax credits would save New Hampshire taxpayers millions of dollars in the long run by reducing state expenditures by more than they would reduce state tax revenue.
In short, Governor Hassan supports corporate welfare but opposes tax credits that assist low‐income families seeking the best education for their children.