Document Type


Publication Title

Brooklyn Law Review



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tax expenditures, Obamacare, Affordable Care Act, tax power, unconstitutional conditions, state action, tax credits


This article compares National Federation of Independent Business v. Sebelius – the Supreme Court’s decision upholding the individual mandate in Obamacare as a tax, with Arizona Christian Schools v. Winn – the Supreme Court’s decision denying standing to taxpayers with an Establishment Clause challenge to a state tax credit. It argues that these cases aggravate a growing tension between the economic and legal analyses of taxation by reducing the legal significance of economic analysis in constitutional cases. It suggests that Arizona Christian Schools was a truly radical decision because it conceptualized tax expenditures as private action immune from constitutional attack, rather than state action subject to constitutional limitations, making tax expenditures legally invisible.

The article parses the Court’s economic and legal approach, and contends that the Court misunderstood the important issues. It explains how tax cuts are distinguishable from spending through the tax law, and why tax expenditures – in the aggregate – should be legally important. It argues that the Court’s approach to tax expenditures not only reduces the fundamental protection that the Constitution guarantees individuals, but also has other troubling legal and policy implications. These decisions weaken the revenue-raising role of taxation, blur the conceptual structure of the tax law, and undermine the tax reform efforts of other branches of government. They jeopardize established legal doctrine by destabilizing the precedents on unconstitutional conditions attached to tax benefits, which depend on conceiving tax benefits as government subsidies or privileges. These decisions encourage legislatures to adopt provisions that favor high-income taxpayers, while discouraging transparent and equitable government. They make the tax law uniquely powerful.