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Why the Constitution Neither Protects Nor Forbids Tax Subsidies for Politicking from the Pulpit, And Why Both Liberals and Conservatives May be on the Wrong Side of this Issue


Monday, Oct. 06, 2008

The Alliance Defense Fund (ADF), a conservative religious organization, recently made headlines when it urged pastors around the country to violate a longstanding federal law providing that contributions to tax-exempt churches and other non-profits are tax-deductible only if the organizations do not endorse candidates for political office. A number of pastors made such endorsements, effectively daring the Internal Revenue Service (IRS) to revoke their preferred tax status.

The clergy participating in the ADF's "Pulpit Initiative" argue that federal tax law violates their First Amendment rights by limiting their ability to tell their flock which candidates best reflect the teachings of Scripture. Meanwhile, supporters of the law contend that it is necessary to protect the separation of church and state, and that, in any event, pastors can say whatever they want--so long as they do not demand a government subsidy to do so.

In this column, I will argue that neither side in this debate is right. The Constitution neither protects nor forbids politicking from the pulpit. Rather, the matter is a policy judgment for elected officials.

Oddly, however, liberals and conservatives each appear to be on the wrong side of the issue. In other contexts, liberals often fret about government using the power of the purse to constrain speech, while conservatives oppose the expenditure of general funds for sectarian purposes. Here the roles are reversed. Politics, it seems, not only makes strange bedfellows, but sometimes puts them on the wrong side of the bed.

The Johnson Amendment

Section 501(c)(3) of the Internal Revenue Code sets forth a list of tax-exempt charitable organizations, including those established for religious purposes--in other words, churches, synagogues, mosques, and other houses of worship. Pursuant to a provision added in 1954 -- and known for its sponsor, then-Senator Lyndon Johnson, as the "Johnson Amendment"-- in order to keep its 501(c)(3) status, a charitable organization may "not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."

What is at stake in being a 501(c)(3) organization? Tax deductions for one's contributors: Another provision of the Internal Revenue Code, Section 170, provides that, subject to some limits not relevant here, donations to 501(c)(3) organizations are tax-deductible for the contributor, but only if the recipient organization complies with the Johnson Amendment.

Thus, as no one seriously doubts, the law commands that pastors who want their churches to retain the deductibility of contributions may not formally endorse or oppose candidates for public office when acting in their official capacity. A minister may preach that abortion is sinful or that the death penalty is murder, but he may not preach that congregants should vote for Candidate So-and-So because she will outlaw abortion or abolish the death penalty, unless he is willing to forego the financial advantages that Sections 501(c)(3) and 170 confer.

Is the Johnson Amendment constitutional? Let us consider, in turn, the following claims: First, that it violates the rights of pastors and their congregants to the free exercise of their religion; second, that it violates the free speech rights of pastors; and third, that it violates the Establishment Clause.

Does the Johnson Amendment Violate Free Exercise Rights?

In the 1990 case of Employment Division v. Smith, the United States Supreme Court held that the Free Exercise Clause of the First Amendment is not implicated by a law that burdens religious practice, so long as the law targets religious and non-religious conduct alike. The particular case involved the application of a law banning peyote use, as applied to a Native American worship service, but the principle is broader.

Suppose a pastor believes that his duty to preach the Gospel is a duty to instruct his congregants on every aspect of life, including politics. Under the Smith rule, the Johnson Amendment does not violate his or his congregation's free exercise of religion, because the Johnson Amendment applies equally to religious and non-religious organizations. Secular universities and animal shelters, no less than churches, will lose their special tax status if they specifically endorse or oppose political candidates.

The Smith case was extraordinarily unpopular when it was decided, leading a nearly unanimous Congress to attempt to overrule it in the Religious Freedom Restoration Act ("RFRA"). Although the Supreme Court held that RFRA itself was partly unconstitutional in the 1997 case of City of Boerne v. Flores, that ruling left RFRA in place as a limit on the federal government. Thus, the Smith rule arguably does not apply to a federal statute like the Johnson Amendment.

Nonetheless, the Johnson Amendment does not appear to violate RFRA either. RFRA requires that the government offer a compelling interest in order to "substantially burden" a person's exercise of religion, even if the burden results from a neutral law. But the government's failure to subsidize religion -- by refusing to provide a tax break -- probably does not constitute a burden at all, much less a substantial burden, under RFRA.

To be sure, the leading pre-Smith precedent, which RFRA purports to "restore," itself involved a subsidy, namely unemployment benefits. But unemployment benefits are a form of insurance, to which employers have contributed premiums on behalf of their employees, and so the withholding of such benefits may be more akin to a penalty than a pure failure to subsidize. It surely cannot be true that every failure to provide benefits constitutes a substantial burden under RFRA, for if it did, then the government would violate RFRA every time it failed to subsidize a financially struggling church. At the very least, in order to prevail on a RFRA claim to displace the Johnson Amendment, the pastors involved in the Pulpit Initiative would need to supply the courts with a persuasive argument for distinguishing 501(c)(3) eligibility from other subsidies, and to explain why taxing contributions to a church "substantially burdens" the church's exercise of religion.

A final argument for invalidating the Johnson Amendment on free exercise grounds relies on a close parsing of the Smith decision itself. In Smith, the majority opinion appeared to overrule an earlier line of cases that required the government to come forward with a compelling justification for burdening religious practice, even if doing so via a neutral law. To distinguish those earlier cases, the Court deemed the rights at issue in them "hybrids" of free exercise rights and other rights. Accordingly, some lawyers and scholars have since argued that even a religion-neutral law like the Johnson Amendment could violate the Free Exercise Clause if a religious claim were combined with some other claim, such as a free speech claim. Thus, there is a possibility that a court faced with such a hybrid claim could invalidate the Johnson Amendment.

However, it is hard to take seriously the discussion of "hybrid" rights in the Smith decision. Why should the presence of a second constitutional right make a difference? Of course, if the challenged law violates the other right, then it is independently unconstitutional. But neither the Smith Court nor anybody else has explained how a law could satisfy the Free Exercise Clause standing alone and some other constitutional right standing alone, but violate these rights in combination. Thus, we do best to consider the claimed other right on its own. Here, that means looking at the pastors' right to free speech.

Does the Johnson Amendment Violate the Right to Freedom of Speech?

Does the Johnson Amendment infringe the free speech rights of pastors? Not according to the leading Supreme Court cases.

In the 1983 case of Regan v. Taxation With Representation (TWR), the Supreme Court upheld Section 501(c)(3), as applied to a secular organization. The Justices reasoned that a 501(c)(3) organization's ability to receive taxpayers' tax-deductible contributions (per Section 170) is a form of subsidy by the government to that organization. However, the government need not subsidize political activity--in that case, lobbying--because it may make the judgment that most taxpayers do not want to subsidize lobbying for causes and candidates that they do not support.

But don't people and the organizations they form have a First Amendment right to engage in political activity? Of course they do, and the tax code permits political organizations to engage in politics, so long as they are organized under Section 501(c)(4) of the Internal Revenue Code. That provision also confers tax-exempt status, but donations to 501(c)(4) organizations are not tax-deductible under Section 170.

Accordingly, if a group wants to engage in both charitable good works and political activities, it must form two separate organizations in order for donations to the charitable arm of the organization to be tax-deductible. In the TWR case, the Court found that this requirement of separate organizations did not violate the free speech rights of the groups or their members, and subsequent cases have reaffirmed that ruling.

Does the Johnson Amendment Constitute a Constitutionally Impermissible Entanglement of Government with Religion?

Some supporters of the Pulpit Initiative also argue that the Johnson Amendment violates the Establishment Clause of the First Amendment because enforcing it requires the government to subject pastors' sermons to close scrutiny. That role, they say, is wholly inappropriate.

The relevant legal principle forbids excessive "entanglement" between church and state, but the pastors invoking it have turned it on its head. The principal entanglement cases involve challenges to public subsidies of religious organizations. The government is permitted to fund the secular, but not the religious, activities of these organizations. However, where the secular and religious activities are too closely intertwined, the courts have struck down the underlying subsidy for fear that otherwise government officials will become too closely involved in the affairs of religious organizations, as they monitor the use of public funds.

If the pastors were right that enforcement of the Johnson Amendment results in excessive entanglement, then perhaps the proper remedy would be to repeal the 501(c)(3) status of the religious organizations. But in fact, the Johnson Amendment has not resulted in much entanglement, because it demarcates a fairly bright line, and the IRS has only sought to investigate clear violations. Indeed, for just that reason, pastors participating in the Pulpit Initiative had to publicly and flagrantly violate the Johnson Amendment in order to draw the government's attention.

Is the Johnson Amendment Constitutionally Required?

Some defenders of the Johnson Amendment have argued that it is necessary to protect the separation of church and state. It is not clear whether they mean by this that the Johnson Amendment is itself constitutionally required, but independent analysis suggests that it is not.

Suppose there were no Johnson Amendment. Pastors would then be able to endorse political candidates from their pulpits with no adverse tax consequences, but so would leaders of other 501(c)(3) organizations. Surely there would be no Establishment Clause violation if the head of a tax-exempt hospital endorsed a candidate (perhaps because the candidate favored universal health care). By extending tax-deductibility of donations to religious organizations, the Internal Revenue Code simply puts these organizations on the same footing as non-religious organizations.

To be sure, one could argue that the Establishment Clause places a special burden on the government not to subsidize specifically religious organizations. However, recent Supreme Court case law points against this proposition. So long as the government, in doling out the subsidies, is neutral with respect to religion, there is not likely to be any Establishment Clause problem. Furthermore, the Supreme Court held long ago that it is not unconstitutional to provide religious organizations with tax benefits that are also made available to analogous nonreligious organizations.

Accordingly, the separation-of-church-and-state objection is probably best understood as an argument about how churches (and synagogues, mosques, and other houses of worships) should behave: They should not engage in politics, with or without public subsidies, because to do so undermines their religious mission. That principle has a long and respectable past, but it is not part of the Establishment Clause.

Policy Hypocrisy: How Both Liberals' and Conservatives' Johnson Amendment Stances Contradict Their Other Principles

In sum, the Johnson Amendment is neither unconstitutional nor constitutionally required. That leaves one question unanswered, however: Is it a good idea as a matter of policy? Here, liberals and conservatives appear to have lost their bearings.

In many contexts, liberals oppose the notion that government can constrain speech because it has funded that speech. Consider debates over funding of the arts, the so-called abortion "gag rule," and the Solomon Amendment (which cuts off funding to universities that, pursuant to their anti-discrimination polices, deny campus access to military recruiters because of the "don't ask, don't tell" law). In each of these contexts, liberals have argued that the First Amendment restricts the ability of the government to limit the speech of recipients of public funds. Why are liberals now generally defending the Johnson Amendment against the same argument by the pastors?

Conversely, conservatives have frequently championed a principle traceable to Thomas Jefferson: the notion that people should not be required to fund the speech of those who disagree with them. For example, conservatives have persuaded the Supreme Court that labor unions may not charge non-union members of their collective bargaining unit for the unions' own "ideological" activities. Why, if conservatives support this principle for unions, do they oppose it for churches?

The answer to both questions seems obvious. The particular pastors involved in the Pulpit Initiative are religious conservatives who have either endorsed the candidacy of John McCain or opposed the candidacy of Barack Obama, or both. Thus, liberals oppose and conservatives favor their activities.

But the underlying questions here transcend the politics of the moment. There was once a robust religious left in this country, and recent developments within the Evangelical movement suggest that the association of religiosity with the Republican Party vastly oversimplifies matters.

Whether one believes that the Johnson Amendment is a good idea as a matter of policy should not turn on whether one happens to favor Democrats or Republicans, liberals or conservatives. For this liberal at least, the underlying issues are difficult, but in the end a conservative principle commends the Johnson Amendment: It has worked quite well until now, so if it ain't broke, don't fix it.

Michael C. Dorf is the Robert S. Stevens Professor of Law at Cornell University. He is the author of No Litmus Test: Law Versus Politics in the Twenty-First Century and he blogs at Neil Buchanan, Sherry Colb, Sarah Lawsky, Martin Lederman, and Steven Shiffrin provided valuable assistance in the writing of this column.

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