UPDATE: The state case referred to below was heard in 1987. In a 2011 case, the Missouri Supreme Court overruled itself -- tax credits, as Patrick Tuohey argues, are NOT state spending.

From the opinion:

"Further, this Court agrees with the recent statement of the Supreme Court of the United States that tax credits are not public expenditures...A tax credit is not a drain on the state’s coffers; it closes the faucet that money flows through into the state treasury rather than opening the drain."

But see this blistering concurring opinion from judge Michael Wolff:

"Are these transferable tax credits public money? If it looks like money and acts like money, it is money. And, because it comes from the state of Missouri, it is public money. And because it is public money, the taxpayers here, Manzara and Marquard, have standing to bring this lawsuit...

"The denial of standing to taxpayers who challenge tax credit spending rests on a flawed economic and legal analysis – an analysis sure to be noted by future historians tracing the origins of the congenial corruption that led to widespread distrust of government and ultimately to its demise. It may not be the end of our republic, but perhaps we may be able to see the end from here...

"The principal opinion in this case, I am sad to say, follows the irrelevant lead of the United States Supreme Court and, in doing so, may lead the Court in future cases to forsake its duty under the Missouri Constitution."

Our friend Patrick Tuohey has a column today entitled "Tax Credits are Not State Funding." You can read the whole post, but Patrick's argument -- using a recent U.S. Supreme Court decision -- is that a grant of a tax credit shouldn't be considered a state expenditure.

It sounds like a boring accounting argument, but it isn't. Supporters of private, parochial schools want Missouri to issue tax credits to individuals who donate to scholarship funds for attendance at private (in many cases Catholic) schools.

The tax credit is seen as a way to get around Missouri's so-called Blaine amendment. The state's constitution says:

"Neither the general assembly, nor any county, city, town, township, school district or other municipal corporation, shall ever make an appropriation (emph. added) or pay from any public fund whatever, anything in aid of any religious creed, church or sectarian purpose, or to help to support or sustain any private or public school...or other institution of learning controlled by any religious creed..."

Are tax credits an "appropriation" or payment from a "public fund"? Patrick says they aren't.

From the 2011 U.S. Supreme Court's 5-4 decision (Kennedy writing for the majority) saying tax credits aren't spending:

"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 Arizona State Treasury."

From the Kagan dissent:

"Cash grants and targeted tax breaks are means of accomplishing the same government objective -- to provide financial support to select individuals or organizations. Taxpayers who oppose state aid of religion have equal reason to protest whether that aid flows from the one form of subsidy or the other. Either way, the government has financed the religious activity. And so either way, taxpayers should be able to challenge the subsidy."

The Missouri Supreme Court has agreed with the dissent, as least as far as a tax credit being an expenditure. Here's what it wrote in a case involving a tax credit for bond payments:

"During oral argument, the parties agreed that there are no reported cases where a court has been called upon to decide whether the allowance of a tax credit constitutes a grant of public funds. This is true, we believe, since the answer is so obvious....

"...This tax credit is as much a grant of public money or property and is as much a drain on the state's coffers as would be an outright payment by the state...There is no difference between the state granting a tax credit and foregoing the collection of the tax and the state making an outright payment..."

In an analysis of the issue for the Missouri Law Review in 2008, Aaron Schwartz -- relying in part on the court's opinion -- writes:

"Any number of tax schemes supporting religious schools are likely impermissible in Missouri because a tax credit is equivalent to a grant of public funds (emphasis added), tax benefits help 'sustain or support' religious schools, and even indirect aid to parochial schools is impermissible."

The differing opinions suggest there is some room for debate on the issue, and that reporters aren't trying to "confuse the issue," as Patrick writes.

The issue is already confused.