Here's a lawsuit that could create a form of school vouchers through tax deductions if the plaintiffs are successful.

A Jewish couple's bid to take a tax deduction they say the IRS reserves only for members of the Church of Scientology is getting a friendly reception from a federal appeals court, increasing the possibility of a ruling that could create a tax break for taxpayers of many religions who pay tuition to religious schools.

During arguments on the case this week, three judges who ride the 9th Circuit Court of Appeals expressed deep skepticism of the IRS's position that the way the agency treats Scientologists is irrelevant to the deductions the Orthodox Jews, Michael and Marla Sklar, took for part of their children's day school tuition and for after-school classes in Jewish law.

"The view of the IRS is it can unconstitutionally violate the Constitution by establishing religion, by treating one religion more favorably than other religions in terms of what is allowed as deductions, and there can never be any judicial review of that?" Judge Kim Wardlaw asked at the court session Monday in Pasadena, Calif.

Basically the IRS has been allowing scientolgists to deduct the cost of their "education" from their taxes since at least 1994, but refusing to treat Christians, Jews, Muslims, or any other religion the same way. Apparently there's quite a history between the IRS and Scientology, and the IRS agreed to this special treatment in exchange for the Church of Scientology dropping thousands of lawsuits against the agency in 1993.

A policy of tax-deductible private school tuition would be superior to any form of distributivist school voucher scheme I've yet seen. Let's hope this case continues to play out favorably.

(HT: TaxProf Blog.)

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