590
Opinion of the Court
In Walz v. Tax Comm'n of City of New York, 397 U. S. 664 (1970), notwithstanding our assumption that a direct subsidy of religious activity would be invalid,23 we held that New York's tax exemption for church property did not violate the Establishment Clause of the First Amendment.24 That
holding rested, in part, on the premise that there is a constitutionally significant difference between subsidies and tax exemptions.25 We have expressly recognized that this distinction is also applicable to claims that certain state action designed to give residents an advantage in the marketplace is prohibited by the Commerce Clause.
In New Energy Co. of Ind. v. Limbach, 486 U. S. 269 (1988), we found unconstitutional under the Commerce Clause an Ohio tax scheme that provided a sales tax credit for ethanol produced in State, or manufactured in another State to the extent that State gave similar tax advantages to ethanol produced in Ohio. We recognized that the party challenging the Ohio scheme was "eligible to receive a cash subsidy"
spending. See Regan v. Taxation with Representation of Wash., 461 U. S. 540, 544 (1983). The distinction we have drawn for dormant Commerce Clause purposes does not turn on this point.
23 We noted: "Obviously a direct money subsidy would be a relationship pregnant with involvement and, as with most governmental grant programs, could encompass sustained and detailed administrative relationships for enforcement of statutory or administrative standards, but that is not this case." Walz, 397 U. S., at 675.
24 We reasoned that "New York's statute [cannot be read] as attempting to establish religion; it . . . simply spar[es] the exercise of religion from the burden of property taxation levied on private profit institutions." Id., at 673.
25 "The grant of a tax exemption is not sponsorship since the government does not transfer part of its revenue to churches but simply abstains from demanding that the church support the state. No one has ever suggested that tax exemption has converted libraries, art galleries, or hospitals into arms of the state or put employees 'on the public payroll.' " Id., at 675. As Justice Brennan noted: "Tax exemptions and general subsidies . . . are qualitatively different." Id., at 690 (concurring opinion).
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