When President Obama outlines his tax-increase plan on Wednesday, it’ll be based on the liberal assumption that all money belongs to the government, with Americans retaining only what bureaucrats allow. That’s the dangerous argument Supreme Court Justice Elena Kagan, an Obama appointee, made last week in a case on education funding.
Arizona Christian School Tuition Organization v. Winn involved a tuition tax credit whereby Arizonans can contribute to groups providing scholarships for private schools. Some cranks argued that because the scholarships can be used at religious schools, the tax credit amounted to unconstitutional government support for religion. The Supreme Court majority ruled that the complainants didn’t have legal standing to sue because none of their own tax money was being funneled to religious organizations.
Justice Kagan, joined by three other liberal justices, dissented, arguing there is no functional difference between a tax credit and a government appropriation. Justice Anthony Kennedy, writing for the majority, shot this down. “[Justice Kagan’s] 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,” he wrote. “That premise finds no basis in standing jurisprudence. Private bank accounts cannot be equated with the Arizona State Treasury.”
Justice Kagan’s dissent gave the game away in its first sentence. The tuition tax credit, she wrote, is “diverted tax revenue.” Later, she elaborated, “Both deplete funds in the government’s coffers by transferring money to select recipients.” Only an extreme statist would write such a thing. The point of a tax credit is to let people direct their own money rather than putting it into “the government’s coffers” in the first place. Only if all money starts as government property can a tax credit be seen as taking money from government hands.
Justice Kagan pushed similar fallacies for years. In a 1992 essay for the Supreme Court Review, she argued that a “nonsubsidy” by a government is legally indistinguishable from a “penalty.” In that article, she was discussing the funding of abortion referral services. “In choosing a stance from which to view government action,” Justice Kagan wrote, “we instinctively consider how the world looked prior to the action.” Thus, “If the starting point assumes funding for all family-planning services, including abortion referral, then the government decision is a penalty.”
Note where her “starting point” is. Justice Kagan always starts with government power and prerogatives. It was in that same 1992 paper that she described First Amendment free-speech rights as something “dol[ed] out” as “a favor” by government. But contrary to the worldview of Justice Kagan and her sponsor in the Oval Office, government is a creation of individual citizens and derives its powers from the people rather than doling out privileges to them. Next year’s election boils down to a fight between these fundamentally different beliefs about the proper scope of government power.