“There’s no dispute that some of the money under this program is going to go to a religious school without restrictions,” said Judge John Lewis of Strafford, New Hampshire Superior Court.
“The very first thing that’s being questioned is whether or not the money that’s used to fund tuition constitutes quote ‘money raised by taxation.’”
In April, Judge Lewis considered whether a state tax credit law violated the state constitution.
The law, passed in June 2012, allows businesses credits against state income taxes equal to 85% of the amount they donate to state-designated scholarship organizations.
The New Hampshire Constitution says, “No money raised by taxation shall ever be granted or applied for the use of the schools of any religious sect or denomination.”
The scholarship organizations may award scholarships to elementary and secondary schools, both public and nonpublic, and to pay for home-schooling.
In states that have such laws, the major scholarship organizations pay only for scholarships to sectarian schools.
New Hampshire’s lawyer, Richard Head, argued that the donated money is never paid to the state, so it is not raised by taxation.
Alex Luchenitser argued for the plaintiffs, “This program uses the tax system to deliver funding for the program. If there was no business profits tax, this program would not exist. The only way we can run this program is if a business owes the tax and chooses to divert some of the tax to this program.
Under questioning from Judge Lewis, Head conceded that if the business chose not to make the contribution, the money would go to the state.
Americans United for Separation of Church and State (AU) and the American Civil Liberties Union (ACLU) back the plaintiffs. Luchenitser is the associate legal director at Americans United.
Governor Maggie Hassan has tried to repeal the tax credit law, but the Senate has balked.
The case is Duncan v. New Hampshire.
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