The opinion of the court was delivered by: MEANOR
This case presents a slightly different facet of the recurring problem engendered by legislative attempts to provide a tax benefit to the parents of children who attend private rather than public schools at the elementary and secondary level. The issue arises upon plaintiffs' challenge
to the constitutionality of N.J.S.A. 54A:3-1(b)2 which provides that under New Jersey's income tax law a taxpayer who has a dependent child attending a non-public elementary or secondary school on a full time basis may for each such child have a personal deduction of $1,000 against gross income.
When this case was called for trial no testimony was presented, all parties agreeing to submit the case on the record as it stood. The facts essential to decision are, therefore, undisputed. Defendants and the intervening defendant
admit that there are 753 non-public schools in New Jersey of which 714 are religiously affiliated. Of the latter, 575 or 80% are Catholic.
Since it safely may be assumed that an overwhelming majority of New Jersey children who attend non-public schools attend such schools within New Jersey, it is clear that only a few such children attend a school that is not religiously affiliated.
The parties are in agreement that the Supreme Court has formulated a three-part test to be used in the determination whether a statute violates the establishment clause.
In order for a statute to be upheld against an establishment clause attack it must satisfy three conditions: (1) it must have a secular legislative purpose; (2) its principal or primary effect must be one that neither advances nor inhibits religion, and (3) it must not foster an excessive government entanglement with religion.
In light of Committee for Public Education v. Nyquist, 413 U.S. 756, 37 L. Ed. 2d 948, 93 S. Ct. 2955 (1973), plaintiffs concede that this court must find that the New Jersey statute in question here has a secular legislative purpose, although they raise the issue in order to preserve it in the event of Supreme Court review.
In their challenge to the statute, plaintiffs rely primarily on Nyquist, supra, and argue that that case alone requires the relief they seek. The issues resolved in Nyquist that are relevant here dealt with a tuition grant program and a tax benefit program. The New York statute there under review provided a tuition reimbursement for parents of elementary and secondary school children who attended non-public schools. If the parent had an annual taxable income of less than $5,000, the parent could receive a tuition reimbursement of up to $50 for each elementary school child and up to $100 for each secondary school student. The statute also provided for tax relief for those who did not qualify for tuition reimbursement. The law provided that taxpayers who had dependent children attending non-public elementary and secondary schools could subtract from their gross income a defined amount for each such child, but deductions were allowed for no more than three children. It was also provided that as the taxpayer's income increased, the amount permitted to be subtracted decreased. For example, if adjusted gross income was less than $9,000, the amount to be subtracted was $1,000; if income was between $15,000 and $16,999, only $400 could be subtracted, and if income were $25,000 or more, no subtraction could take place.
The Supreme Court invalidated the tuition reimbursement program
and then turned its attention to the tax benefit features of the New York statute. The Court began its discussion by noting that the parties had engaged in a dispute "over what label best fits the New York law." 413 U.S. at 789. The appellants maintained that the law provided for tax credit. The State claimed that it was a system of income tax modifications and the Solicitor General, appearing amicus, referred to the statute as providing for income tax deductions.
The Court pointed out that while in effect the scheme was like a tax credit, it was in form a tax deduction. The Court then said, "We see no reason to select one label over another, as the constitutionality of this hybrid benefit does not turn in any event on the label we accord it." 413 U.S. at 789.
I see no distinction of constitutional moment between the income tax deduction provided in the statute under attack here and the tax benefit program invalidated in Nyquist. In both cases the parent taxpayer receives a financial reward from the state for sending his child to a non-public school. Since the vast majority of those schools in New Jersey are religiously affiliated it follows that this income tax deduction provision has the direct effect of aiding religion and is, under Nyquist, in violation of the establishment clause.
It is also my opinion that as well as violating the "effect" or second part of the three-part test, the New Jersey statute at issue also violates the "entanglement" or third prong of the test. In Nyquist, the Court observed that had the statute remained viable there undoubtedly would have been continuing pressure to enlarge its benefits.
One need not be clairvoyant to know that if this New Jersey statute continues there will be increasing pressure to enhance it. This would enmesh New Jersey in continuing political strife over aid to religion, thereby engaging the government of New Jersey in excessive entanglement with religion. See Nyquist, supra, 413 U.S. 794-798.
Great emphasis has been placed by defendants upon Walz v. Tax Commission, 397 U.S. 664, 25 L. Ed. 2d 697, 90 S. Ct. 1409 (1970) in which property tax exemptions for religious organizations withstood an establishment clause attack. I need not discuss this argument at length. Walz was also relied upon by the appellees in Nyquist and was thoroughly distinguished by Mr. Justice Powell's opinion for the majority. Since I have found that Nyquist is controlling here, obviously Walz can be of no aid to the defendants.
Since severability is a question of legislative intent,
it seems clear that defendants are correct in their position that the legislature would not wish to retain the deduction with respect to attendance solely at non-sectarian schools. In view of the fact that the overwhelming majority of beneficiaries of the statute as written would be parents of children attending religiously affiliated primary and secondary schools, it is extremely unlikely that the New Jersey legislature would have provided this deduction only for the parents of that comparatively small number of children who attend non-sectarian private schools. Sloan v. Lemon, 413 U.S. 825, 833-834, 37 L. Ed. 2d 939, 93 S. Ct. 2982 (1973).
For the reasons set forth in this opinion, plaintiffs are entitled to a declaratory judgment that that portion of N.J.S.A. 54A:3-1 italicized in footnote 2 of this opinion is unconstitutional in violation of the establishment clause of the first amendment. Plaintiffs are also entitled to a permanent injunction against defendant Glaser restraining him from permitting any taxpayer to take the income tax deduction held unconstitutional in this opinion for taxable years ending in 1977 and successive years.