Duke University Law Professor Richard Schmalbeck says Reversing the Johnson Amendment Will Open the Door for People and Institutions to Push Their Political Agendas through the Church In Order to Deduct It Come Tax Season
For more than 60 years, churches, along with all other charitable organizations, have been subject to an absolute ban on participation in “any political campaign on behalf of (or in opposition to) any candidate for public office.”
The Trump administration announced earlier this month its plans to introduce legislation that would reverse this rule as to churches — a technically simple amendment to the Internal Revenue Code. This would have one arguably beneficial effect: It would free churches and their clergy to express the full range of their opinions on matters of public policy, even if those opinions might be seen as campaign participation.
Unfortunately, giving churches the opportunity to participate in campaigns may well prove to be unhealthy for both the political process and for churches themselves. This is primarily because contributions to churches (and other charities) are deductible for federal and state income tax purposes. This means that churches, if freed from the ban on campaign participation, would be the only institutions in our society that could engage in political activity on a tax-deductible basis.
Individuals can participate in campaigns, and contribute to parties, candidates and action committees, but they get no deduction for doing so. The same is true of businesses, labor unions, chambers of commerce — really, it’s true for everyone: Contributions of money or time to political causes are simply not deductible, period.
It does not take a great leap of imagination to realize that if wealthy people and institutions can deduct the cost of their political activities, but only if those activities are funneled through a church, they will do precisely that. If for some reason they cannot find a cooperative church to be their mouthpiece, they can easily create one. While most charities must fill out an exhaustive application to the IRS for recognition of their exempt status, churches alone are not subject to that requirement. They enjoy an automatic presumption of exempt status.
Churches are also favored by the provisions of the Church Audit Procedure Act, which prohibits random audits by the IRS, and provides special procedural protections for churches if the IRS decides that it has good cause to conduct a church audit. These special provisions are well-motivated: Congress has wanted to protect churches from unnecessary entanglement with the government. But the audit protections offer a pathway to abuse by individuals and groups that might want to use church status as a shield against enforcement of the rules regulating charitable organizations.
So the temptation to make the church megaphone available — on a deductible basis — to organizations that have political agendas, but not necessarily religious ones, would be hard to resist, and nearly impossible for the IRS to control.
Furthermore, explicit reversal of the ban on campaign activity is probably unnecessary. Even though they are obligated by law to refrain from political activity, many churches engage in it anyway.
At most, the ban on campaign participation seems to induce churches to constrain their engagement in politics. This makes their political activity mostly harmless, because an occasional reference in a sermon or a pastoral letter to an issue that is prominent in a political campaign is unlikely to move many votes. The recipients are probably inclined in the same directions as their church leaders are anyway, so low-key participation isn’t terribly influential.
Richard Schmalbeck is a professor of law at Duke University who specializes in tax and nonprofit organization law.