Gaddy v. Georgia Department of Revenue

Litigation: Challenging Georgia’s “Qualified Education Expense Tax Credit” program, enacted in 2008, on grounds that public funds are impermissibly allowed to flow to private schools and that tax credits for such purpose are disallowed by Georgia’s constitution.  Opposed to educational choice program: Four Georgia taxpayers, Southern Education Foundation In support: Becket Fund, Cato Institute, EdChoice, Institute for Justice The original complaint, Gaddy v. Georgia Department of Revenue, No. 2014 CV 2445538 (Fulton County Super. Ct. Feb. 5, 2016), brought by four Georgia residents backed by the Southern Education Foundation, alleged that the tax-credit scholarship program violated the state constitution’s ban on providing public support to religious institutions, and several other constitutional provisions. The trial court affirmed the program’s constitutionality, observing that the tax credit would not “increase their taxes or drain the state treasury” and that “the Program may actually save the State money.”

Outcomes: On June 26, 2017, the Georgia Supreme Court rejected a challenge to Georgia’s tax-credit scholarship program, ruling that plaintiffs had no standing to sue.

Why it Matters: This ruling explicitly affirmed that tax credits are not appropriated from the state treasury and therefore no public funds are used for the program. The court relied on numerous prior court rulings affirming this result. The court also noted that plaintiffs could show no harm caused because of Georgia’s scholarship program. This ruling set the stage for legislative expansion of the program in ensuing years.

Effects: More than 13,000 students were using scholarships to access educational options in 2017; since this ruling, the program has expanded to serve over 16,000 students.

Amicus Brief Amicus Brief