In the case of Mueller et al. v. Allen et al., 1982, the U.S Supreme Court ruled on a Minnesota law that allowed taxpayers to deduct expenses for tuition, textbooks and transportation related to their children's education from state income tax. The plaintiffs argued that this law violated the Establishment Clause of the First Amendment as it indirectly supported religious schools since many parents used these deductions for expenses incurred at private religious institutions. However, in a 5-4 decision, the court upheld the constitutionality of this statute stating that it did not violate separation between church and state because its purpose was secular - supporting educational opportunities for all students regardless of whether they attended public or private schools - and its primary effect neither advanced nor inhibited religion as it provided benefits to both types of schools equally without favoring one over another.

In the dissenting opinion for Mueller v. Allen, Justice Thurgood Marshall argued that Minnesota's tax deduction scheme violated the Establishment Clause of the First Amendment by providing financial assistance to parents who sent their children to religious schools. He contended that this law was not neutral towards religion as it disproportionately benefited those attending sectarian institutions over public or non-religious private ones. Furthermore, he pointed out that most beneficiaries were Catholic school attendees, thus favoring one particular religion and breaching constitutional principles of government neutrality towards religion. The majority’s argument about similar benefits available for all students regardless of where they attended school did not convince him; he believed such a view ignored reality since public school expenses were already covered by taxes and hence less likely to benefit from additional deductions.