[EL] Trump wants to force you — the taxpayer — to pay for campaigning from the pulpit

[Sean Parnell]

There are good arguments against – and for – repeal of the “Johnson Amendment” but I’m not sure the notion that taxpayer dollars would be used to fund campaigning from the pulpit is one of them, as claimed in “Trump wants to force you – the taxpayer – to pay for campaigning from the pulpit<https://www.washingtonpost.com/posteverything/wp/2017/02/03/trump-wants-to-force-taxpayers-to-pay-for-campaigning-from-the-pulpit/?utm_term=.a8f71e4ffcd9>.” It rests on the idea that the money spent by churches (and other nonprofits) represents taxpayer dollars, but that is at the least a contested notion. For starters, even if you were to say that the federal revenue forgone because of the deduction for charitable contributions AND the exemption from corporate income taxes constitutes a subsidy, converting the money in the church’s bank account into “taxpayer dollars,” by my rough calculations even if the deduction was taken at the highest marginal tax rate (39.6%) and the total revenue of the church were taxed at the highest corporate income tax rate (35%), that still leaves roughly 25% of the money in the bank account “pure” and NOT taxpayer dollars. Under the formulation described in this article, it would presumably mean it’s OK for church’s to spend up to 25% of their general funds on politics (for simplification I’m ignoring state and local taxes – include them and the 25% figure might fall as low as 15% or even 10%). Surely this is not the intent of this argument?
More importantly, there is a pretty solid body of scholarship and analysis explaining why the charitable tax deduction is not a subsidy, and thus why money that might be spent on, say, a pastor’s speech from the pulpit does not constitute “taxpayer dollars” being used for political purposes. From an article titled “Why is Charitable Activity Tax-Protected<http://www.philanthropyroundtable.org/almanac/why_is_charitable_activity_tax_protected/>?” by Alex Reid:
In recent years, our deficit-ridden federal government has been coveting the billions of dollars that citizens send annually to charities. For several years in a row, President Obama proposed cutting the income-tax deduction for charitable giving. Congress entertained some of its own proposals for capping, eliminating, or altering the charitable deduction as part of tax reform.

Policymakers sometimes justify these changes by claiming that the charitable deduction is a government subsidy for charity. A more accurate understanding is that the charitable deduction is simply an accounting mechanism to ensure that your income is measured accurately. Money you give away for public benefit is neither part of your income nor the government’s money to claim. Any income tax requires a charitable deduction as a matter of ­principle, because funds given away for the public good are not part of a taxpayer’s personal resources.
The state doesn’t sponsor and subsidize civil society using tax revenue. It is individuals who create civil society using their own funds. The state simply avoids interfering when it eschews taxing of those transactions.
There’s also the following, from a paper by the late Adam Yarmolinsky<http://journals.sagepub.com/doi/pdf/10.1177/0899764000291010>:
If the charitable exemption is not a subsidy, what is it? A more reasonable view might suggest that it marks one of the outer limits of tax policy. Oliver Wendell Holmes acknowledges the existence of constitutional limits on the taxing power in a famous dictum, when he wrote (in dissent at the time), “The power to tax is not the power to destroy, while this court sits,” although he chose not to invoke those limits in that case (Panhandle Oil Co. v. Mississippi, 1928, pp. 218, 223). There have been sharp disagreements in the evolution of federal tax policy over what constituted confiscatory taxation. It took a constitutional amendment to validate the federal income tax, despite Holmes’s opinion that an amendment was unnecessary. However, there seems to be general agreement that the power to tax is not unlimited. This is not to suggest that the charitable exemption has some constitutional protection. Theoretically, the Congress could abolish it. Politically, abolition is a nonstarter. Not Wall Street but Main Street would rise in revolt, because Main Street is the principal locus of the American charitable community.

It seems more consistent with the nature of the American polity, therefore, to think of the charitable deduction as a self-imposed limitation on taxing power, adopted by the Congress on the premise that it is more nearly in accord with the American character to leave to individual discretion some decisions about the allocation of resources for public purposes, where the individual is willing to forgo a portion of his or her personal resources for the same purpose. It does not vitiate this argument that Congress has defined public purposes, in the broadest possible terms, to give scope to individual taxpayer decision making (essentially, charitable, educational, and scientific, along with something called “testing for public safety”), and that it has placed an upper limit on the proportion of one’s resources that can be so used.

Finally, A 2001 paper by Edward Zelinsky<http://lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=2183&context=bclr> explains why the term “subsidy” is inappropriate when discussing the charitable deduction, at least as it concerns religious entities. After extensive analysis, he concludes:
Today, the Supreme Court's case law generally conditions tax exemptions, deductions, and exclusions for religious institutions upon the concurrent extension of such benefits to secular entities and activities. The Court's position flows logically from its acceptance of the premise that tax exemptions, deductions, and exclusions constitute subsidies.

However, as a normative matter, my conclusion is to the contrary. In the context of tax benefits, the "subsidy" label is usually deployed in a conclusory and unconvincing fashion. The First Amendment is best understood as permitting governments to refrain from taxation to accommodate the autonomy of religious actors and activities; hence, tax benefits extended solely to sectarian institutions should pass constitutional muster as recognition of that autonomy. Since it is most compelling to conceive of religious tax exemption as the acknowledgment of sectarian sovereignty, rather than the subsidization of religion, there is no convincing constitutional reason to link that exemption to the simultaneous extension of comparable tax benefits to secular entities and undertakings.

In the final analysis, tax exemption does not subsidize churches, but leaves them alone.
To the extent there is concern over taxpayer dollars being used to fund political speech in the context of the Johnson Amendment, this probably isn’t something to be worried about. Though it would be interesting to see a Venn diagram showing any overlap between people who have this concern, and those who support “clean elections” or “fair elections” or whatever they are being called these days.
Best,
Sean Parnell
Vice President for Public Policy, The Philanthropy Roundtable
1120 20th Street NW, Suite 550 South
Washington, DC  20036
(202) 600-7883 (direct)
(571) 289-1374 (mobile)
sparnell at philanthropyroundtable.org<mailto:sparnell at philanthropyroundtable.org>


“Trump wants to force you — the taxpayer — to pay for campaigning from the pulpit”<http://electionlawblog.org/?p=90899>
Posted on February 3, 2017 9:18 am<http://electionlawblog.org/?p=90899> by Rick Hasen<http://electionlawblog.org/?author=3>
Ellen Aprill <https://www.washingtonpost.com/posteverything/wp/2017/02/03/trump-wants-to-force-taxpayers-to-pay-for-campaigning-from-the-pulpit/?utm_term=.884f04aad02f> for WaPo:
At Thursday’s National Prayer Breakfast, President Trump renewed his campaign pledge to repeal — in his words, “totally destroy<http://www.cnn.com/2017/02/02/politics/johnson-amendment-trump/>” — the Johnson Amendment, a provision of our tax code that prohibits charitable entities, including churches, mosques and synagogues, from intervening in campaigns for elected office, at the risk of losing of their tax-exempt status.
Bad idea, Mr. President.
Current law already permits religious leaders and religious organizations to express their views about candidates without undermining our campaign finance laws. What they can’t do is express those views on the taxpayer’s dime. Doing away with the Johnson Amendment would undermine the principle that all campaign finances are taxed at least once, placing taxpayers in the unreasonable position of subsidizing the partisan agendas of religious entities.
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Posted in campaign finance<http://electionlawblog.org/?cat=10>, tax law and election law<http://electionlawblog.org/?cat=22>

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