This article makes it seem as if the only churches that engage in the kind of speech the IRS proscribes for tax-exempt organizations are conservative Evangelical churches. Given the long history of African-American churches as centers of political organization in their communities, that can’t be and simply isn’t true.
This piece offers a cogent defense of the ADF’s Pulpit Freedom Sunday initiative. While I think that the First Amendment’s free exercise clause offers a pretty good argument for the tax exempt status of churches (otherwise the government could use its tax policy to influence their behavior, something that we have of course–wink, wink–rarely seen), it seems to me that the best defense of religious freedom is political.
I don’t want judges or IRS bureaucrats deciding which statements made from the pulpit or elsewhere in the church reflect the “core mission” and which don’t. I’d rather have people across the country tell politicians to keep their hands off our churches, mosques, synagogues, and temples and punish them at the ballot box (a quaint expression prior to Sandy) if they don’t. Of course, doing so requires precisely the kind of education that ADF is undertaking (though it would be more effective if some Obama-supporting pastors could be recruited to join the effort).
For what it’s worth, I have never heard a statement endorsing a candidate from the pulpit in a church I have attended. But that doesn’t mean I regard such statements as simply extraneous to the mission or un-biblical.
November 5th, 2012 | 10:11 am
Erik Stanley’s argument is not very strong. Churches give up the right to endorse a candidate by choosing to organize as a tax-exempt organization, rather than the other way around. That is, it isn’t that Churches should give up their right to be tax-exempt to be able to engage in political speech. It’s that Churches gave up their right to engage in certain types of political speech by choosing to be tax exempt.
Additionally, the argument isn’t that it would literally subsidize political speech to allow tax-exempt churches to engage in it. The argument is that it effectively would. People would be able to participate in political speech through Churches using pre-tax money, rather than post-tax money. In terms of its effect, that’s no different than a subsidy.
Not addressed is how deleterious this would be to religion in America. The religious organization would surpass the Superpac as a means of engaging in political speech, since it would allow unlimited, tax deductible donations. If Churches can engage in political speech, expect the Koch bros. and George Soros to start religions, since the establishment clause doesn’t let the state distinguish between real and false religions.
November 5th, 2012 | 10:33 am
Joseph Knippenberg –
The First Amendment guarantees freedom of speech as well as religion, though. Shouldn’t journalists and columnists be tax-exempt to protect them from government influence, too?
And hey, it also guarantees freedom of assembly. Aren’t fees to rent public spaces for events likewise un-Constitutional?
November 5th, 2012 | 11:49 am
When you get into the thickets of Title 26, otherwise known as the Internal Revenue Code, and the various other administrative prouncements (Treasury Regulations, Revenue Rulings, Revenue Procedures-all the way down to Private Letter Rulings) that put meat on the bones of the law as passed. (Almost all federal laws today delegate an unhealthy amount of discretion to the unaccountable bureaucracy),
you soon realize that although codified as charities under 501(c)(3), the tax exemption for Churches MUST come from the First Amendment.
A discussion of the provisions of Sec. 501(c)(3)
is byond the scope of this post (and the patience of most people) but consider this:
Among other things, ordinary charities obtain their exemption from tax by having an “exempt purpose”, specifically, to advance education, to be charitable, test for safety, etc. All of the things listed, are things that are normally thought to be functions of government-so in essence these organizations relieve the government of some burdens of expenditure.
Churches existed before the government and don’t exist at its pleasure or to further its aims-the independence of Churches was explicitly recognized in the Constitution. To assert otherwise is to assume that Churches are presumed should have their creeds or pronouncements regulated by external tax lawyers, not their creeds.
What you see here is more evidence that a direct federal tax, is the principal mechanism of tyranny. It’s an endless source of divisive theatrics, and insidious cronyism. We argue about who gets taxed, what gets taxed, how much to tax-but all of it is done without much consent of the governed or taxed. It is easy to promise to make the tax code simpler and fairer-and those promises have been made for decades-because the reality is there’s no way to qualify or quantify simplicity or equity. The only way to “fix” the tax code is to eliminate it. Even if we were to make changes that a substantial number of the citizenry agreed met those aims-it wouldn’t last, since there’s no way to prevent future incarnations of the government from tinkering with it-promises expire with the next election.
November 5th, 2012 | 12:08 pm
The rule is in place to keep 501c3 (organizations that can accept donations and which confers a tax-deductible benefit to the donee) from accepting political contributions that would otherwise not be tax free. So, the basic underlying premise of the rule is for Caesar to get his due on tax day.
So long as Churches follow the letter and spirit of that rule, then they are fine. The letter and spirit seem to me to be a direct funneling of resources to a specific campaign (i.e., electioneering). So, taking 10% of the collection plate for candidate x’s campaign or allowing the campaign to use church offices subsidy and rent free to make campaign calls. The easiest to enforce bright line rule is direct material contribution whether in cash or in kind or indirect material contribution with assistance for direct material contribution (allowing the hall to be used as a place for a campaign fundraiser). Really, anything outside of that gets into murky “church-state” and “1st amendment” issues that courts simply won’t want to wade into. I think the IRS knows this.
Two cents.
November 5th, 2012 | 3:42 pm
For Jaime r and Alberto Hurtado:
You both seem to think that Churches are simply another form of 501(c)(3). It’s a common misconception, but demonstrably wrong.
They are not, even though their exemption is codified there. Because they are not just another form of 501(c)(3), they are relieved of a variety of common requirements-including the requirement to file a “1023″ exemption package.
http://www.irs.gov/publications/p557/ch03.html#en_US_2011_publink1000200048
The reason is obvious-the Church is not seeking recognition of an “exempt” purpose. A Church’s exempt purpose arises by virtue of its existence.
The reason is that the Constitution (not the Internal Revenue Code), is the supreme law of the land). That some people advance the idea that exemption is a tax preference of some sort presumes the government has a right to burden religion with taxes. It doesn’t.
An exemption from tax is a subsidy only if it is selective. Churches are not in competition with businesses, so taxing them is not a subsidy, but it would be a way to prevent free exercise.
Exemption from tax is just one of a broader array of immuties enjoyed by Churches as a part of their freedom from state intrusion. Until the present administration decided it was entitled to direct the affairs of Churches, the government was so conscious of unlawful state interference-Congress never defined a Church.
In the absence of statutory direction, the IRS (using, among other things court decisions) issued a list of objective characterics it would use to determine whether or not an organization is a church.
(Treasury Reg. §1.511-2(a)(3)(ii))
http://www.law.cornell.edu/cfr/text/26/1.511-2
As much as I despise Congress passing the buck and winking when the enforcing bureaucracy issues rules with the effect of law, they are objective and generally reasonable-even if it doesn’t comprehensively anticipate every ecclesial, associative or credal form.
As much as you seem to be operating from the common premise of the political left that churches check their right to speak out on politics, that’s simply not plausible.
To have the IRS assessing speech to determine whether or not it is “allowable”, means the IRS is empowered to tell the clerisy what it can and cannot say. Will you have agents read bulletins? sit in pews? attend pastoral counseling and confession? How far will you go evacuate churches of political speech?
You can’t have (authentic) freedom of religion and then empower Herod (that analogy is more applicable here) to decapitate the Church, by muzzling and gagging its leaders and members, through limits on their speech.
We know what it looks like when the lawful exercise of religion is determined by the state. China.
Now if your intent was advance the notion that the federal tax code is irrepairable because fairness can never be an objective quality-thanks.
November 5th, 2012 | 8:05 pm
Mr. Gasper,
So, what part of the tax code prevents Christians and clergy from starting a PAC?
If you choose to be a Church, rather than a PAC, you’ve chosen tax exemption and not political speech. Unless I’m mistaken, nothing prevents the exact same group of people from doing both things. But there’s no reason for the government not to tax political expenditures just because it’s passed through a church.
More importantly, since the government is not in the business of judging whether a religion is valid or not, I don’t think we should give the Soroses and Kochs of the world an incentive to make fake churches to replace their PACs.
November 5th, 2012 | 9:50 pm
It’s rather telling that the Johnson Amendment has never been enforced. Almost as if they’re scared to give someone standing to challenge it.
November 6th, 2012 | 4:56 am
Jamie R
This is exactly what happens in France. Part of a Church’s activities are conducted through an « association cultuelle » whose activities are limited to conducting worship and training clergy. Part of its activities are conducted through one or more « associations reconnues d’utilité publique »[“associations recognized to be of public utility,” or charities. Both enjoy tax exemption (and also the power to receive legacies). Then, they have other associations to conduct non-qualifying activities. These bodies are all legally distinct, but have the same personnel.
The Catholic Church and the Jewish community have been particularly adept at creating these juridical structures. Some evangelical groups, often foreign-based, have fallen foul of them, through lack of proper legal advice.
November 6th, 2012 | 9:01 am
Bernard Gasper, CPA –
Why are newspapers not likewise exempt? Or do you think they should be? (Joe Knippenberg, feel free to weigh in any time.)
November 6th, 2012 | 10:47 am
@Jamie r
“If you choose to be a Church, rather than a PAC, you’ve chosen tax exemption and not political speech.”
So say you.
I already explained why that’s wrong. You simply refuse to accept it, will not or cannot follow the analysis. There’s a difference between holding an opinion, and holding an informed, professional opinion. Treasury Circular 230 allows three classes of professionals to dispense tax advice-Attorneys, CPA’s and Enrolled Agents. I’ve provided my qualification-what is yours?
“I don’t think we should give the Soroses and Kochs of the world an incentive to make fake churches ”
Nice strawman argument. Read the link to Treas Reg 1.511, before repeating that suggestion again. You will see that it is a highly implausible suggestion. If you are that wealthy, you didn’t get that way by pursuing fool’s errands. Of course, if they did, I don’t care-I believe in free association and if George Soros can get people in a “church”, that’s no worse than a politician packing a stadium or Soros paying drones to work in super-pacs.
“Unless I’m mistaken.”
You are very mistaken.
@Ray Ingles:
“Why are newspapers not likewise exempt?”
A newspaper could very well be exempt, if it organized as 501(c)(3). There is nothing to stop someone from advancing an educational or other valid exempt purpose through printed materials, and I’m sure on a small scale, some do.
But on a large, (NY Times/Wall Street Journal) scale, the IRS might take the view that ad revenue is not in futherance of an exempt mission and require it to pay Unrelated Business Income Tax or “UBIT” and since ad revenue is the biggest part of a paper’s revenue-what’s the point?
Another requirement of 501(c)(3) is the absence of a profit motive and stockholders. I assure you the great publishing empires were profit motivated. Newspapers are capital intensive businesses-big name reporters need to be paid. There’s paper, presses, trucks and today, a huge IT structure, etc. So, the short answer is that nobody has yet found a way to operate a general purpose paper as a tax-exempt and prosper.
November 6th, 2012 | 10:54 am
@Jamie r
One other point:
“But there’s no reason for the government not to tax political expenditures just because it’s passed through a church.”
So if ‘political expenditures’ pass through a candidate or Party or other organization, should they be taxed? Will you be proposing tax the Presidential candidates? Organizing for America? Labor unions? Or are you just singling out churches?
November 6th, 2012 | 12:02 pm
Bernard,
are donations to candidates and parties tax deductible? So then those donations are taxed.
If you really want political donations to be tax free, then campaign to make political donations tax deductible. Making PACs and Churches indistinguishable does no one any good.
November 6th, 2012 | 5:12 pm
“are donations to candidates and parties tax deductible? So then those donations are taxed.”
No, but donations to Churches and charities are not deductible unless you itemize.
However, I note your attempt to change the argument-you were not discussing the deductibility of the donation by the donor-you were discussing the exemption from tax of the donee entity.
“It’s that Churches gave up their right to engage in certain types of political speech by choosing to be tax exempt.”
Look, I get it. You have this bitter hostility to religion and you think nothing should be escaping Ceaser’s greedy hand. However, no matter how much you argue (poorly) it doesn’t change the facts, two of which is that you don’t understand tax law and contentiousness is a poor substitute for validity.
November 7th, 2012 | 9:12 am
Based on my not wanting the government to incentivize and subsidize pseudo-religious PACs, I have bitter hostility to religion? No.
I have a bitter hostility to Caesar. As a pure policy point, leaving aside the legal question, if the Catholic Church starts endorsing candidates, there’ll be zero chance of the Church receiving a dime of my money. If my Bishop endorses a candidate, I will move to another diocese. The last thing the Church needs is to get more in bed with Caesar. The last thing we need is for the Church to become more entangled in the BS political divisions that divide America.
At the level of economic incentives, it doesn’t matter whether the expenditure isn’t taxed when it’s donated or when it’s used.
November 7th, 2012 | 11:32 am
Bernard Gasper, CPA – I appreciate the information on the law as it exists, but I’m more asking about why it exists in that state. You see, you said:
But what I’m not following is, if ‘free exercise of religion’ is an automatically exempt purpose, why is not ‘free speech’ likewise exempt? It’s denoted in the same language in the same amendment. Why the difference in application?
November 7th, 2012 | 3:36 pm
@ Ray Ingles
Why the difference in application?
What difference? If you want to set up a tax exempt (non-profit, although the term is misleading) newspaper, have at it. It won’t fly, but you can give it a go.
@Jaime r
“if the Catholic Church starts endorsing candidates, there’ll be zero chance of the Church receiving a dime of my money.”
Terrific. You should think about in the light of how the Church is calumnied about Hitler. Despite clear communications from the Poe about Naziism, the Church is accused of not having done enough.
November 9th, 2012 | 11:08 am
Bernard Gasper –
Why aren’t all newspapers tax-exempt, the way you show all churches are? Why doesn’t a newspaper’s “exempt purpose arise[] by virtue of its existence”?
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