Keep Churches' Tax Break, With Strings Attached
When evangelicals turned out en masse to vote for Donald Trump, seculars gaped. The serially divorced self-proclaimed groper who talked glibly of “Two Corinthians” hardly seemed like the sort of fellow to attract the admiration of every-Sunday churchgoers.
But evangelicals had a blunt response: Trump might be less than ideal, but he was also the lesser of two evils. Trump might not be a role model for them, but he would at least not pursue the sort of policies that had convinced Christians they were under an existential threat from the Democratic Party, like forcing Christian businesses to bake cakes for gay weddings. He would not use the power of the office to advance the continuing sexual liberalization of the culture. And of course, they expected that Trump would appoint judges who would help chip away at Roe v. Wade, if not overturn it entirely.
And so far, Trump has delivered. He appointed the impeccably conservative Neil Gorsuch to the Supreme Court. He announced he would reverse the military’s decision to allow transgender soldiers. And now Republicans have shoehorned one of his campaign promises into the tax bill: overturning the Johnson Amendment, which requires that churches abstain from political activity if they want to maintain their tax status.
This has long been on the wish list of conservative churches. The theological wisdom of this is debatable: Christ’s injunction to “render unto Caesar the things that are Caesar’s” is usually taken as a warning not to get the church too entangled in worldly politics. Many conservative Christians worry that a politicized church would be a church that had less focus on its core mission of saving souls, one sinner at a time. But regardless of whether churches should dive more deeply into political campaigning, many clearly want to, and the Trump administration may help them realize that dream. 1
Which means the rest of the country, the ones with no pulpit from which to preach the gospel of their party, needs to decide whether this is a good idea. And to decide that, we should first think about why churches are forbidden from campaigning in the first place.
I don’t mean the actual reasoning behind the Johnson Amendment, which appears to have been motivated not by deep concern over the purity of the tax code, but by Lyndon Baines Johnson’s desire to hamstring opponents who might otherwise have succeeded in forcing him out of office. “Get Lyndon Baines Johnson elected” was never much good, as principles go, and at any rate, it is now well past its sell-by date.
Nonetheless, over the years, people who think about tax law have articulated a reasonably consistent set of principles for restraining churches from campaigning from the pulpit. These have nothing to do with the reasons you will normally hear bandied about, like separation of church and state. Rather, they involve the basic principles of good taxation, which start with the idea that in most cases, income should be taxed once, and only once. Let's consider what this principle means in practice.
Say you want to put up some flyers around your neighborhood to support Jill Stein for president. You’re doing some of the things that businesses do -- you know, buying paper and staplers and printing services. Should you be taxed like a business? Of course not, say tax experts, because you’ve already paid taxes on the income that you’re using to print the flyers. It’s your money now.
Now let’s say you have a rich friend who loves your flyers, and wants to help you print more of them. You guys set up a joint bank account so that your friend can deposit money whenever funds are running low. Now you look more like a business, so should you be taxed? Nope, for the same reason: Both of you have already paid taxes on that income (and Kinkos will pay taxes again, when they declare the profit from your business). The fact that there are two of you instead of one doesn’t alter the fact that fundamentally, this is a private consumption activity, and none of the government’s business.
Now add more rich friends … dozens, hundreds, thousands. At what point should this become a taxable activity? As long as you are still doing basically the same thing -- pooling private funds to pursue joint personal goals -- the answer is arguably “never.”
Now at this point someone will notice that, in a lot of ways, a church resembles that large group of friends, hanging out, doing some worship, having bake sales to support missionary work. Why, then, should they not be able to add “political campaigning” to the list of stuff they do together?
Because churches are not just exempt from taxation themselves; donations to churches count as a charitable deduction, which means that any amount you donate to your church reduces your taxable income by that amount. That money has not been taxed at all, which means that donations are no longer simply an instance of private consumption. They are being subsidized by the government -- and the government has the right to decide what sort of activity it wants to subsidize.
Is political activity by churches something that the government should be subsidizing? I’d argue “probably not.” 2 If we want to subsidize political activism, we should subsidize all of it, not just the activity that happens to be performed by charitable institutions. We should offer individuals a deduction for any campaign flyers they print on their own dime. Allowing only some groups to enjoy tax subsidies for campaigning, while others have to pay for it out of taxable income, is more likely to distort the political process than to improve it.
Charitable groups, after all, are often the beneficiaries of government money aimed at various public ends, like providing lunches to school children and helping care for the needy (and potentially school vouchers, which could finance church-run schools). Allowing those groups to simultaneously enjoy a large tax subsidy, while campaigning for politicians, would encourage the growth of a sort of perpetual-motion money machine, in which tax-exempt donations are funneled into lobbying the government for more tax money.
Alternatively, we could just strip away the charitable deduction and let churches and other groups do whatever they like with their donations. This would get the government out of the business of deciding what counts as a “real” religion, and what sorts of sermons count as “political activity.” It would be scrupulously fair. And it would not be very popular with churches.
But in fact, the best arrangement is probably the status quo, in which we forbid churches from politicking, and then don’t enforce it too tightly. Churches are, like the rest of us, quite free to do “issue advocacy,” which is why the Catholic Church can remain a tax exempt charity while having very strong opinions about the death penalty and abortion law. They are not free to campaign for candidates, though the IRS probably isn’t going to come knocking if the pastor mentions that George Smith sure has a swell record on the issues that the denomination cares about. But the legal restrictions keep them from going hog-wild and abandoning their religious mission to become an official arm of some political party. And those who don’t attend a church, mosque, synagogue or temple, have to pay for their flyers with no help from the government -- but also get to sleep in on the Sabbath.
The beneficiaries of tax-exempt status are not all Republican. Consider that black churches, stalwart supporters of the Democratic Party, are actually more likely than others to be preaching politics from the pulpit.
Oh, you can make a case that political activity is the great engine of liberal democracy, and it’s in the public interest to have as much of it as possible. (One could also argue that ad-saturated swing states can’t stand much more of this sort of public interest, but that’s another column.)
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Philip Gray at email@example.com