Luthens v. Bair

Litigation: Challenging Iowa’s “Tuition and Textbook Tax Credit,” enacted in 1987, which originally allowed either a state tax deduction or credit for parents who pay private school tuition or pay for textbooks at those schools for their children. Opposed to tax credits for education: Iowa Association of School Boards, National School Boards Association. In support: State of Iowa

Outcomes: On March 17, 1992, the U.S. District court for the Southern District of Iowa held that Iowa’s newly enacted “Tuition and Textbook Tax Credit” program was constitutional. Citing a previous ruling of the U.S. Supreme Court, Mueller v. Allen, 463 U.S. 388, 103 S. Ct. 3062, 77 L. Ed. 2d 721, 1983 U.S. 96, upholding Minnesota’s Education Tax Deduction, the court ruled that Iowa’s tax credit for private school educational expenses does not violate the Establishment Clause of the First Amendment to the United States Constitution.

Why it Matters: This federal district court in Iowa relied on a previous ruling in favor of a tax deduction program in Minnesota, Mueller v. Allen. The Mueller case was a landmark ruling that remains good law today and is frequently cited by courts upholding tax credits for education.

Effects: Over 11,000 families claimed a state tax credit for tuition and textbooks in 1987, the first year of the program. Today, over 116,000 families claim this credit. Also, in 2006, Iowa enacted a tax credit scholarship program and that program, serving over 10,000 students and was recently expanded, has not been challenged.