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Tax Fight Coming Over Politicking by Churches, Nonprofits

Endorsing or opposing candidates is prohibited — for now

Lawmakers are considering legislation that could have broad implications for churches and charities. (Roll Call file photo)
Lawmakers are considering legislation that could have broad implications for churches and charities. (Roll Call file photo)

How lawmakers resolve one contentious item between the House and Senate’s diverging tax overhauls may have broad implications for future politicking by churches and charities.

The House bill would repeal the longstanding Johnson Amendment, which prohibits churches and other 501(c)(3) nonprofit organizations from endorsing — or opposing — candidates for elective office. But after a backlash from liberal organizations who said the change could open up a whole new avenue for undisclosed political money at taxpayer expense, senators decided not to roll back the Johnson Amendment in their overhaul plan.

Now activists on both sides of the debate are ramping up campaigns over the small piece of the mega-legislation.

“We think this is a huge problem, both for institutions that don’t want to mix politics with their goals to serve the public, and because of the way it will drive much more dark money into our elections at all levels,” said Lisa Gilbert of Public Citizen, which opposes the House measure’s Johnson Amendment repeal.

Gilbert said the most recent version of the House bill, championed by Ways and Means Chairman Kevin Brady of Texas, would allow politicking not only from the pulpit but would also free up universities, hospitals and charities to endorse candidates without risk of losing their tax-exempt status.

Brady said earlier this year that through the overhaul, House Republicans planned “to repeal the damaging effects of the Johnson Amendment, so our pastors and our preachers can practice their faith and their biblical teachings without fear of Washington or the IRS targeting them.”

President Donald Trump said in February he wants to “totally destroy” the Johnson Amendment, but an executive order he issued in May did not change the law.

The original provision in the House bill rolling back the Johnson Amendment only for churches was estimated to cost taxpayers $2.1 billion from 2018 to 2027, according to the Joint Committee on Taxation. The reason for the cost is that political contributors would be expected to give more tax-deductible donations to churches that could then engage in endorsements. Political donations, by contrast, are not tax deductible.

Under the amended bill that was advanced to the House floor, the repeal of the Johnson Amendment would be delayed by one year and sunset after 2023. The cost did not change, according to the latest JCT estimate.

“The Senate chose not to include similar language, and that is likely … because they know just how unpalatable this is to so many,” said Gilbert, who also noted that it could trigger the Byrd rule that bans the inclusion of any provision whose budgetary impact is merely incidental to an underlying policy goal.

Social conservatives and those who advocate for campaign finance deregulation, however, say the Johnson Amendment restricts free speech and puts a muzzle on pastors who fear losing their lucrative tax-exempt status.

Jerry Falwell Jr., president of the conservative Liberty University, has called for the Johnson Amendment’s repeal.

James Bopp Jr., a well-known conservative lawyer, said he, like other social conservatives, opposes the Johnson Amendment because it provides the IRS with loosely defined standards that can give the government an excuse to target certain groups based on their political agenda.

“Those kind of vague standards allow arbitrary enforcement and political viewpoint discrimination,” said Bopp, who favors campaign finance deregulation.

Still, not all religious organizations favor the change, according to a survey by the National Association of Evangelicals. Nearly 90 percent of evangelical leaders do not think pastors should endorse politicians from the pulpit, the group reported in a survey earlier this year.

“Evangelicals emphasize evangelism, and pastors often avoid controversies that might take priority over the gospel message,” Leith Anderson, president of the group, said at the time. “Most pastors I know don’t want to endorse politicians. They want to focus on teaching the Bible.”

Karen Hobert Flynn, president of the liberal-leaning group Common Cause, said the House repeal of the Johnson Amendment “takes the bill beyond just a massive giveaway to the nation’s billionaire class to now allow wealthy special interests to manipulate the charitable sector for partisan political ends, all with a subsidy from American taxpayers.”

She said the move would create a “massive loophole.”

“More secret money will flow to these charities and endorsements and support will be purchased behind closed doors,” she noted in a statement. “The amendment must be removed or the partisan politicization of some charities will do serious damage to the reputation of all charities.”  

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