Gaddy v. Georgia Department of Revenue
301 Ga. 552
Ga.2017Background
- Georgia enacted HB 1133 to create a tax-credit-funded scholarship program allowing taxpayers to receive Georgia income tax credits for donations to private nonprofit student scholarship organizations (SSOs); statutes: OCGA § 48-7-29.16 and OCGA § 20-2A-1 et seq.
- Credits: up to $1,000 per individual, $2,500 per married filing jointly, and corporate limits; aggregate annual cap ($56–58 million) with Commissioner to approve credits first-come, first-served.
- Plaintiffs (four Georgia taxpayers) sued Department of Revenue and Revenue Commissioner, alleging HB 1133 (the Program) violated: (1) Education Assistance provision, (2) Gratuities Clause, and (3) Establishment Clause of the Georgia Constitution; sought declaratory and injunctive relief.
- Plaintiffs also alleged statutory violations (Counts 4–6) against the Department for failing to enforce OCGA § 48-7-29.16(d) prohibitions on SSOs promising benefits for particular individuals and sought mandamus to compel enforcement.
- Trial court dismissed the constitutional claims for lack of standing, dismissed the statutory-enforcement claim for lack of private right of action, denied dismissal of mandamus claim; plaintiffs appealed and the Department cross-appealed the mandamus ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing as taxpayers to challenge constitutionality | Taxpayer status suffices because tax credits divert public revenue, increasing plaintiffs’ tax burden and amount to public expenditures | Tax credits are not appropriations or public funds; donations are private funds; any budget impact is speculative and insufficient for standing | Plaintiffs lack taxpayer standing; speculative budget effects and private nature of contributions do not show injury |
| Tax credits = public funds (for constitutional clauses) | Credits effectively take money from public treasury (foregone revenue) and fund scholarships, including at religious schools, violating constitutional prohibitions on public funds | Statute shows contributions remain private and never become state property; Budget Act distinguishes tax expenditures from appropriations | Credits are not public funds/appropriations; constitutional clauses requiring public fund expenditure do not apply; plaintiffs lack standing on this basis |
| Standing under OCGA § 9-6-24 to enforce constitutional duties | § 9-6-24 allows any citizen to enforce public duties and thus challenge constitutionality without special interest | § 9-6-24 does not permit a citizen to attack validity of a statute; it targets enforcement of duties, not invalidation | § 9-6-24 does not confer standing to challenge statute constitutionality; plaintiffs lack standing under this statute |
| Mandamus to compel Commissioner to revoke SSOs’ status for prohibited representations | Plaintiffs cite an SSO website statement and allege Commissioner failed to revoke status under OCGA § 48-7-29.16(d)(2) | Defendants argue no clear statutory violation was alleged and mandamus cannot compel general enforcement or discretionary acts | Mandamus claim dismissed: plaintiffs did not allege an actual statutory violation or a clear legal right; mandamus unavailable to compel general enforcement |
Key Cases Cited
- Feminist Women’s Health Ctr. v. Burgess, 282 Ga. 433 (2007) (standing requires an adverse effect on litigant’s own rights)
- Lowry v. McDuffie, 269 Ga. 202 (1998) (taxpayer standing where illegal local tax exemption increased others’ tax burden)
- Arizona Christian Sch. Tuition Org. v. Winn, 563 U.S. 125 (2011) (taxpayer plaintiffs lacked Article III standing to challenge tax-credit scholarship program)
- McCall v. Scott, 199 So. 3d 359 (Fla. Dist. Ct. App. 2016) (Florida court rejected taxpayer standing and held statute demonstrated private funding, not state diversion)
- Kotterman v. Killian, 972 P.2d 606 (1999) (Arizona decision rejecting classification of tax credits as public funds for Establishment Clause analysis)
- City of East Point v. Weathers, 218 Ga. 133 (1962) (no injunctive relief where plaintiffs not shown to be hurt by enforcement)
- Schrenko v. DeKalb County School Dist., 276 Ga. 786 (2003) (standards for mandamus relief)