No Representation Without Taxation

On October 18th, 2016, Cardinal Sean P. O’Malley, the archbishop of Boston, held a meeting with over 40 interfaith leaders to discuss new strategies for defeating the marijuana legalization question on the ballot. Throughout the course of the meeting, the archbishop took a strong stance against the legalization of the substance, citing concerns ranging from a potential exacerbation of the opioid epidemic, detrimental effects on poor neighborhoods, and possible entrapment of children in the drug’s leafy fingers. While Cardinal O’Malley stated that he encouraged individual Catholics to donate to the cause, the Catholic church would only be spending “a relatively tiny amount” on the campaign, and that money would mainly be spent on advertising purposes.

Just a week later, however, the archbishop changed his mind. In a last minute, seemingly all-out effort, the Cardinal donated a whopping $850,000 of Catholic church funds to the anti-legalization campaign, often referred to as “NO to 4.” “The more he thought about this and prayed about this, he thought this was the right thing to do because it directly impacts the people we’re trying to help,” archdiocese spokesman Terrance Donilon said of Cardinal O’Malley’s change of heart. This immense contribution accounted for a roughly fifty percent increase over what the campaign had already raised.

The money, however, was donated in vain. The voters of Massachusetts, availing themselves of the democratic process, voted on November 8th to legalize the recreational use of marijuana.

Nevertheless, the donation by the Catholic church does raise several interesting questions about political donations, particularly when considering that the Catholic church is a tax-exempt organization. Under the United States tax code, tax-exempt organizations are not allowed to make donations to political candidates. Following this same logic, tax-exempt organizations should not be allowed to make donations to efforts to prevent or pass legislation, as it is equally as important as donating to candidates.

According to the IRS, “To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual.” Tax-exempt organizations, mainly charities, churches, and educational institutions, are, as the name implies, exempt from paying taxes and are given this status mainly because they provide a public good. Serving the community and helping the needy often inherently fails to yield profits, so tax breaks from the government allow these organizations to continue providing these valuable and benevolent services unimpeded, maximizing the amount of money that they can put towards these efforts. Additionally, religious institutions, like churches, are given tax-exempt status so the government may not infringe upon the free exercise of their religion, as per the free exercise clause of the first amendment. In fact, while most organizations who wish to be under 501(c)(3) regulation need to apply, churches are automatically given the tax-exempt status.

Over time, politicians realized how dangerous it could potentially be to give tax-exempt organizations complete control over how they used their funds. In 1954, then-Senator Lyndon B. Johnson proposed a change to the tax code that said that all tax-exempt, or 501(c)(3) organizations, are, in the words of the IRS, “prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.”

This “Johnson Amendment”, however, did not take it far enough. While preventing tax-exempt organizations from donating to political causes is considered by many to be a good thing, donations towards political movements should be likewise banned. The Johnson Amendment was implemented to stymie direct influence on the shape of the government of organizations that did not pay taxes, so surely engaging in donations to political causes, rather than merely candidates, is an overt violation of the spirit of this law.

If the real reason that tax-exempt organizations have this coveted status is so that they can use the money they raise for charitable purposes, to divert these tax-exempt and donated funds away from these purposes and towards political activities would prove antithetical to the very reason they have been given this status.

 

While the 2016 question on whether marijuana should be legal in Massachusetts ended up passing, past intervention by the church has helped to defeat several ballot measures. One, for example, was the 2012 Massachusetts ballot question on whether doctor-assisted suicide for terminally ill patients should be made legal. “The Boston Archdiocese and its affiliated entities contributed about $2.5 million,” per the Boston Globe, towards efforts to prevent the practice from becoming legal. Voters ultimately acquiesced, deciding to keep the practice illegal. Efforts to prevent or pass legislation are equally as important as efforts to get an official elected or not, and should be treated the same under the law, as the spirit of the law applies the same.

Many, including President-elect Trump, argue that instead, the entirety of the Johnson Amendment should be removed and tax-exempt organizations should be given a full voice in government. To back up this argument, many critics of the Amendment cite the recent Supreme Court holding of Citizens United v. Federal Elections Commission (2010), which made unlimited donations by corporations to political candidates and causes legal. Why then, they advocate, should religious organizations and other tax-exempt organizations be singled out? Tax-exempt organizations, however, are rightfully in a different category. When taking tax-exempt status, these organizations lose some of their rights. In a strange reversal of the colonial revolutionist’s cry of “No taxation without representation!”, in the case of 501(c)(3) organizations, this should be flipped, to be “No representation without taxation!” By forgoing this natural voice in government, 501(c)(3)’s naturally diminish their opportunity to financially engage in the political arena.

Alternatively, some have argued that tax-exempt organizations could, if freed of their Johnson Amendment obligations, act as a counterbalance to corporations, which, as stated before, have been recently given a voice in government through the Supreme Court’s holding in Citizens United. While corporations are organizations that are inherently self-interested, perhaps tax-exempt organizations, funded by the general public, would promote causes that the general public supports. Expecting non-profits to counteract the egocentric goals of corporations would be the definition of beating around the bush. If that were the goal, might it not be simpler and more logical to instead limit the corporations rather than liberate non-profits? That’s like sending your dog into your garden to kill a snake – either way, someone’s getting bit.

If the real reason that tax-exempt organizations have this coveted status is so that they can use the money they raise for charitable purposes, to divert these tax-exempt and donated funds away from these purposes and towards political activities would prove antithetical to the very reason they have been given this status. For the more unique case of churches, however, a part of their tax-exempt status is intended to prevent government infringement upon the free exercise of religion. Ultimately, the reasons 501(c)(3)’s are unable to donate to political candidates naturally lend themselves to extension into political causes, for separating the two is semantic at best and subversive at worst. Either way, the Catholic church certainly cannot find any valid, legal reason to be able to donate to a political cause such as marijuana legalization.

 

 

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