Churches are automatically tax-exempt by law, and yet work so feverishly to observe the restrictions in the law for maintaining that tax exempt status under section 501(c)(3), that one would think it hangs from a string. Yet a close look at these restrictions and their origin paints a different picture.
In 1954, when Congress was amending the tax code, Senator Lyndon B. Johnson of Texas rose one day to add an amendment, in the form of a restriction to Section 501(c)(3). The amendment provided that an entity would be considered tax exempt under this section only if it were one "which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.”
Why did Johnson do this? He had won election to his Senate seat six years earlier by a margin of only 87 votes, and that the validity of the election itself was suspicious. He was now up for re-election, and was expected to win against his opponent, Dudley Dougherty. But two secular, nonprofit organizations, Facts Forum and Committee for Constitutional Government got behind Dougherty in the race, and supported him on an increasingly popular anti-Communism platform. Johnson made inquiries with the IRS Commissioner to determine whether these organizations were breaking any law by their political involvement, but was told they were not. It was in this context that he introduced the amendment, which would take away their ability to take sides in the election.
When Johnson offered the amendment, there were no discussions, hearings, debates, considerations of its Constitutional basis, nor even any discussion about whether it applied to Churches. In fact, as Erik W. Stanley points out (1), Johnson's chief aide in 1954, George Reedy, maintained that "Johnson would never have sought restrictions on religious organizations." The amendment was taken into committee and was adopted as the House and Senate versions of the tax reform were being reconciled.
And that seems to be the long and short of it -- an amendment, as Stanley says, that "appears to be nothing more than an attempt by a powerful senator to silence political opponents that he feared were hurting his chances for re-election."
It should be noted that in 1987, the words "in opposition to" were added to this amendment, so that it now reads "any political campaign on behalf of or in opposition to any candidate for public office." Believe it or not, that addition also was motivated by the self-interest of other politicians seeking to silence nonprofit organizations.
Such is the history of the Johnson Amendment, which is still law today, and quoted often by dioceses in their official memos to parishes. Yet the history of the interpretation, application, and enforcement of this law has been so vague, confused, and inconsistent, that even the Congressional Research Service has concluded, “The line between what is prohibited and what is permitted can be difficult to discern.”(2)
We will examine how absurdly vague it is as we continue this series.
(1) Stanley, Erik W., LBJ, The IRS, and Churches: The Unconstitutionality of the Johnson Amendment in Light of Recent Supreme Court Precedent, Regent University Law Review, Volume 24, 2011-2012, Number 2.
(2) (Erika Lunder & l. Paige Whitaker, Cong. Research Serv., rl 34447, Churches and Campaign Activity: Analysis Under Tax and Campaign Finance Laws 2 (2008)).