Holy Cash Cow

Building on Spotty's earlier post on the upcoming legal assault on the prohibition of religious organizations to endorse specific political candidates without losing their tax exempt status, the big elephant in the room as far as this issue is concerned is not simply an attack on the separation of church and state, but should this case be resolved in favor of the churches, the new interpretation of the law will have created a completely tax free political operation that could operate above and beyond the existing framework of issue-based 527s. In other words, by allowing churches to back individual candidates without losing their tax exempt status, the state will effectively be sanctioning the coordination of tax exempt religious organizations with political parties and campaigns.

Currently, religious organizations are able to function as virtual 527s under a specific section of IRS code (more on this code later on in the post). For instance, the Catholic Church puts out an issue-based voting guide that tells the flock how to cast a vote based on Catholic teachings. The difference between 527s and the hypothetical religious safe-haven is that there would be absolutely nothing in the way of individual churches organizing their efforts with specific campaigns and politicians should the tax exempt requirements be removed. There would be no limits on donations and the entire code governing the political actions of religious non-profit organizations would be thrown out the window.

Of course the big secret here (and the reason why I call churches "virtual 527s") is that several churches already function as de facto political operations. As mentioned above, many religious issues (such as the Catholic Church's 5 non-negotiable issues: abortion, euthanasia, stem-cell research, human cloning, and gay marriage) already line up along easily recognizable political lines and as anyone who has attended a Catholic church not named St. Joan's can tell you, bi-partisan voter organization comes with a wink and a smile. We've come a long way from the days of Americans fearing that John F. Kennedy would be a slave of the Vatican. Currently, we have a major political party actively petitioning Catholics to vote according to the desires of a foreign nation. Anywho...

Wrapping this part of the post up, churches are able to receive tax exempt status not because they don't make a profit, but rather that they fall under a very clear section of the IRS code, 501(c)(3):

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.

The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.

Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. For a detailed discussion, see Political and Lobbying Activities. For more information about lobbying activities by charities, see the article Lobbying Issues; for more information about political activities of charities, see the FY-2002 CPE topic Election Year Issues.

Here's the kicker: nothing is preventing churches from endorsing candidates from the pulpit. Nothing. Should a church decide to endorse candidate x, or coordinate with political group y, they would lose their tax exempt status. It's that simple. They are not being prohibited in any way, shape, or form from speaking their political mind. This lack of a barrier extends even further into religious practice; if churches do not want to perform gay marriages in states where it is legal, they are more than welcome to do so at the expense of their tax exempt status. The reason why they have tax exempt status in the first place is because they are assumed to perform a general public function for all citizens. Keep in mind that there is a very clear difference between the right of religious freedom and the privilege of being tax exempt. The folks behind this sick movement not only want to kick down the wall between church and state, but they also want to create a gigantic, tax-free political safe-haven that would be the repository for millions and millions of conservative political dollars. It is a naked secular play for all the best that Caesar has to offer...dressed up in a frock.

Finally, I can see and understand the argument against the way in which religious organizations are set up in relation to the state. However, the really cynical part of this new initiative is that it seeks to settle a legislative issue (IRS code) through the courts. For all the talk of activist judges and an out of control judiciary, the folks behind this movement are seeking to overturn the legislative will of the people by judicial fiat. They want the Supreme Court of the United States to simply reinterpret a law rather than organize their legislators to re-write the clearly identified code that is at the center of their problems: IRS 501(c)(3). Like many religious issues of the day, this particular exercise is little more than a political ploy with very specific, and temporal, ends.

UPDATE: I received my first email as a member of the Cucking Stool and it had to do with the exempt purposes of IRS code 501(c)(3). Instead of droning on and on about it, let me simply point you to the relevant section of the IRS website:

The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

As you can clearly see the IRS treats religious organizations with the same gloves as it does scientific ones. Again, you can bemoan the jurisdiction of the IRS until the cows come home but this is a legislative matter, not a judicial one, as the scope of their oversight is rather simply marked by...wait for it...settled legislation. Even the one relatively unclear area ("advancement of religion") is intentionally void of anything approaching doctrinal adherence. It's one thing to proselytize; it's quite another to prohibit. Keep in mind that the IRS is quite lenient in its acceptance of what 501(c)(3) organizations can do with regards to issue advocacy. For instance, scientific groups and associations can encourage their members to vote according to issues-based beliefs just like the Catholic Church does with the previously mentioned 5 non-negotiable issues. Instead of backing anti-abortion initiatives, a scientific group can encourage anyone interested in the sciences to vote for candidates that believe in (for example) evolution, the threat of global warming, and the reconstitution of the Office of Technology Assessment. The bottom line here is that the IRS is not prohibiting speech by handing out tax exempt status on the basis of providing a service for the common good. If your organization wants to make a statement that excludes membership and services according to political, racial, gender-based, or sexual orientation; or if your organization wants to endorse a specific candidate or party, then you are free to do so at the expense of your tax exempt status. Admittedly, there is an area between issues-based advocacy and political speech that is a bit more problematic than I make it all seem (Can religious groups advocate against gay marriage without losing their tax exempt status once GLBT unions are accepted across the nation?), but...well, that's a post for another day.

Perhaps the best question to ask the yahoos behind this silly new initiative is this: Do you advocate allowing scientific organizations to engage in partisan political actions without losing their tax exempt status? I suspect you know the answer to this question. They can't have it both ways. Either you are a tax exempt organization or a partisan political outfit.

Finally, here are the relevant cases for taxes and tax exemptions for religious organizations:

Walz v. Tax Commission of New York City (May 4, 1970) held that the government may exempt nonprofit organizations, including churches, from paying property taxes.

Bob Jones University v. U.S. (May 24, 1983) held that religious organizations do not have a free exercise right to tax-exempt status. The decision upheld the Internal Revenue Service’s decision not to exempt the university because its discriminatory policies subverted the “overriding governmental interest” in ending race bias.

Texas Monthly v. Bullock (February 21, 1989) stuck down a law exempting only religious publications from state sales tax. In order to withstand scrutiny under the Establishment Clause, such laws must benefit religious and secular groups equally.