In the above case, the court threw out a lawsuit against a state program offering tax credits for donations to organizations that give private-school scholarships.
Justice Kagan in dissent wrote the following:
Imagine that the Federal Government decides it should pay hundreds of billions of dollars to insolvent banks in the midst of a financial crisis. Suppose, too, that many millions of taxpayers oppose this bailout on the ground (whether right or wrong is immaterial) that it uses their hard-earned money to reward irresponsible business behavior.
In the face of this hostility, some Members of Congress make the following proposal: Rather than give the money to banks via appropriations, the Government will allow banks to subtract the exact same amount from the tax bill they would otherwise have to pay to the U. S. Treasury.
Would this proposal calm the furor? Or would most taxpayers respond by saying that a subsidy is a subsidy (or a bailout is a bailout), whether accomplished by the one means or by the other? Surely the latter; indeed, we would think the less of our countrymen if they failed to see through this cynical proposal.
I wish that some Congressperson had made this proposal, & I don’t think that it is cynical at all. You see, a bank that is losing millions (or billions) of dollars in the financial crisis won’t pay any tax. They had no money, that’s why they needed a cash infusion… In Justice Kagan’s analogy, there would be no bailout; therefore, the bank would fail thereby moving it into the bankruptcy process, which is where it belonged.
She missed her calling. Instead of creating ill-conceived analogies in dissenting opinions on the court, she should have run for Congress. In Justice Kagan’s America, banks don’t get bailed out, taxpayers keep their money, our debt stays low, and our grandchildren thrive.