On Monday, the Supreme Court handed down a decision in re Arizona Christian School Tuition Organization v. Winn et al. (563 US 09-987) and Garriott v. Winn et al. (563 US 09-991). The result was a narrow victory for religious freedom.
The substance of the case: Arizona provides a tax credit for contributions to school tuition organizations such as ACSTO. In effect, this stops the "double tuition" people pay when supporting both public schools and private education, forcing public education to be more competitive for the education dollar. But since ACSTO offers tuition to sectarian schools, a group of citizens backed by the ACLU—say it isn't so!—claimed that the tax credit amounted to establishment of religion. The claim was rejected at the state level and upheld by the Ninth Circuit (thus maintaining their penchant for reversible error).
In an opinion joined by Chief Justice Roberts and Associate Justices Alito, Scalia and Thomas, Justice Anthony Kennedy ruled that a tax credit for a contribution to a sectarian organization is only "establishment" if one holds that all money is government property, a premise which Kennedy stated "finds no basis in standing jurisprudence". Kennedy also found that the plaintiffs had no grounds for cause or controversy: previous decisions had established that being a taxpayer isn't sufficient by itself to gain status of concerned party, and that tax credits can't be presumed to shift the burden of the government's budget to the benefit or detriment of any side.
A tax credit for A for donating money to a sectarian STO doesn't translate to an unconstitutional tax on B in support of religion. B's money is patently not being directed to a sectarian organization, and A is patently not receiving state funds for contributing to a sectarian STO.
Justice Scalia filed a supporting opinion, in which Thomas joined. The dissenting opinion was written by Justice Kagan, with Breyer, Ginsburg and Sotomayor joining. You can find the opinion on the Justia website; be advised that, if you use Firefox, you may have trouble with the Supreme Court's .pdf files.
[H/T to Marianne Medlin of CNS]