When last we visited Republican meddling with the Johnson Amendment, it was (according to me) much ado about very little. With passage of the tax bill in the House of Representatives on Thursday, it has turned into something serious.
To review, the Johnson Amendment is the section of the tax code (introduced in 1954 by then-Senate Majority Leader Lyndon Johnson) that prohibits non-profit organizations from engaging in partisan political activity. Whether you’re a church or a college, a boy scout troop or a society for the prevention of cruelty to animals, you’re supposed to lose your tax-exempt status if you endorse or oppose candidates for public office.
During last year’s presidential campaign, Donald Trump seized upon the Johnson Amendment as a great evil, and in deference to the desires of a segment of his activist religious base vowed to “totally destroy” it. In seeming deference to presidential wishes, the first version of the House tax bill gave a small nod in that direction.
In a provision tacked on at the end, it provided that religious institutions would not be considered in violation of the Johnson Amendment:
solely because of the content of any homily, sermon, teaching, dialectic, or other presentation made during religious services or gatherings, but only if the preparation and presentation of such content–
(A) is in the ordinary course of the organization’s regular and customary activities in carrying out its exempt purpose, and
(B) results in the organization incurring not more than de minimis incremental expenses.
In other words, if a preacher had been giving a sermon last fall on the importance of “welcoming the stranger” in the Judeo-Christian tradition and at the end urged her congregation therefore to vote for Hillary Clinton, she would not have fallen afoul of tax law. This is the kind of “pulpit freedom” that has been urged for a decade by the Alliance Defending Freedom, which last month wrote a letter to GOP congressional leaders asking for passage of something called the Free Speech Fairness Act in order to allow pastors “to speak—or not speak—as their conscience requires.”
In fact, the Speech Fairness Act — introduced by Majority Whip Steve Scalise (R-LA) and former Southern Baptist pastor Jody B. Hice (R-GA) on February 1 — goes far beyond just giving pastors the freedom to politick for candidates in front of their flocks. It exempts all non-profits from the purview of the Johnson Amendment “solely because of the content of any statement” made in the “ordinary course…[as above].”
On November 9, the Ways and Means Committee substituted that language for the narrowly written religious exemption in the first draft. The bill now exempts not just sermons that support or oppose candidates but any and all communications customarily made by non-profits in advocating a cause or soliciting support.
What happened was a classic bait-and-switch, and mea culpa for not seeing it coming.
Of course most non-profits, like most pastors, have no interest in electioneering — not that they wouldn’t have to fend off donors who would like to get them to get into it on one side or another.
“They’re not doing organizations like mine a favor,” says Marc Stern, General Counsel of the American Jewish Committee. “It’s going to make our life much harder.”
And then there are those non-profits whose issue advocacy is effectively partisan, who up till now have been obliged to stay out of electoral politics if they wish to keep their tax-exempt status as a 501(c)3 organization.
The Alliance Defending Freedom is itself a 501(c)3, for example, as is the Family Research Council, which (it turns out) is also backing this change in the law. Coincidence? I doubt it.
One might also mention the American Legislative Exchange Council (ALEC), the Koch-funded promoter of conservative legislation at the state level. It was sued by Common Cause a few years ago for violating its 501(c)3 status by lobbying. Under the House tax bill, it might well shelter under the new exemption.
Such right-wing organizations (and their left-wing counterparts) sometimes have associated 501(c)4s that can electioneer. But 501(c)4s are not eligible for tax-deductible contributions. Under the House tax bill, donors wanting to back particular candidates — or a particular party — could make their contribution tax-free by giving to a 501(c)3.
“No question it’s an end run about campaign finance reform,” says the AJC’s Stern. “It will lead to all sorts of shenanigans.”
Among those shenanigans would be brand-new 501(c)3s, whose “regular and customary activities” are closely tied to partisan politicking. Long story short, if you want to further politicize our non-profit sector and deepen the polarization of our public life, the House tax bill is just the thing for you.