Statement of Reverend Barry W. Lynn,
Executive Director,
Americans United for Separation of Church and State
Testimony Before the Subcommittee on Oversight
of the House Committee on Ways and Means
Hearing on Review of Internal Revenue Code Section 501 (c)(3)
Requirements for Religious Organizations
May 14, 2002
Mr. Chairman and Members of the Subcommittee On Oversight:
My name is Barry W. Lynn. I serve as executive director of Americans United for Separation of Church and State, a 53-year-old watchdog organization created to protect religious liberty. The organization is concerned about protecting the twin guarantees of religious freedom in the First Amendment: prohibiting governments from encroaching on the free exercise of religion and prohibiting government promotion of some religions over others or of religion over non-religion. I am an ordained minister in the United Church of Christ as well as an attorney.
I appear today in strong opposition to several proposals to allow tax-exempt religious organizations to engage in partisan political activities. In my view, both H.R. 2357 ("Houses of Worship Political Speech Protection Act") and H.R. 2931 ("Bright-Line Act") run afoul of sound public policy and the United States Constitution. Far from merely clarifying the rights of religious institutions, these bills would grant special rights to certain religious groups not given to similarly situated secular groups and would deeply politicize America's churches, synagogues, temples and mosques.
Current tax law exempts certain organizations from taxation, including those organized and operated for religious purposes, provided that they do not "participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office." 26 U.S.C. § 501 (a), (c)(3) (1994). This levelheaded policy works perfectly for all concerned: Tax-exempt religious institutions are not used or manipulated for partisan political purposes, and religious leaders remain free to speak out on moral and ethical issues of the day.
This harmony would be dramatically altered by enactment of either of the aforementioned bills. H.R. 2357 would allow institutions described in section 508 (c)(1)(a) ["churches, integrated auxiliaries, and conventions or association of churches"] to engage in partisan activities so long as "no substantial part" of their activities would constitute intervention in political campaigns. H.R. 2931 would permit intervention in campaigns so long as the expenditures did not exceed five percent of the organization's gross revenues for the year.
The prohibition against partisan political intervention which exists today applies equally to both churches and other secular charities that claim tax-exempt status. There is absolutely no Supreme Court authority under either the "free exercise of religion" or "free speech" provisions of the First Amendment that even remotely suggests that churches are entitled to exemption from tax law requirements that apply to all similarly situated groups. Therefore, both pieces of legislation raise important constitutional questions of equal protection of the law and violation of the Establishment Clause, that principle of constitutional jurisprudence that holds that government cannot favor religion over non-religion.
Perhaps the closest analogy to the kind of policy embraced in the proposals is the Supreme Court decision in Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (l989). There, the state of Texas had created an exemption for sales tax on religious publications, including periodicals and books containing sacred texts. The publishers of Texas Monthly, a secular magazine, challenged this disparate treatment favoring religion and prevailed. The Court noted: "It is difficult to view Texas' narrow exception as anything but state sponsorship of religious belief…" Id. at 15.
Accordingly, should either proposal before you be enacted, any non-religious 501(c)(3) organization, still required to maintain a position of no endorsement of candidates, would be able to allege that the special treatment of religious groups violated the Establishment Clause. Giving preferential treatment to churches, a status not accorded the scores of other charitable, non-profit groups is a giant step in the wrong direction.
Just one year after the Texas Monthly decision, the Supreme Court made clear that a state can decline to exempt churches from a generally-applicable sales tax, because religious activity is not "being singled out for special and burdensome treatment." Jimmy Swaggart Ministries v. California Board of Equalization, 493 U.S. 378 (l990). In Christian Echoes National Ministry v. United States, 470 F.2d 849 (10th Cir. L972), cert. denied, 414 U.S.864 (1973), the appeals court ruled that Section 501(c)(3)'s prohibition against political activities may be applied to churches in the same manner as to other charities. Indeed, an appeals court upheld the revocation of tax exemption for a New York church's participation in a political campaign to defeat Bill Clinton finding no significant burden on the right to freely exercise the religious beliefs proscribed by the faith. Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000). Taken together, these cases demonstrate there is no serious constitutional claim that taxing authorities must, or can, treat religious groups differently from other charities.
The practical implications of these bills would be staggering. Anywhere from 5% to 20% of a church's revenues could go for partisan activities. There are many churches and related organizations with multi-million dollar budgets. A typical so-called "mega-church" with a $2 million budget under H.R. 2931 could contribute $100,000 to partisan campaigns. Under H.R. 2357, that same church could send $225,000 to favored politicians. * If the Southern Baptist Convention or the Unification Church's entire budget was taken into account, such entities could spend over $1 million dollars on electioneering.
It is also worth noting that the Congress passed, and President Bush recently signed, a major overhaul of the campaign finance system. Although some have questioned the constitutionality of that proposal, enactment of the bills under consideration here would open another enormous loophole in a system already viewed as Byzantine and inequitable.
Houses of worship are awarded tax-exempt status because the government assumes that their work is charitable and educational, not political. To undo the restriction on church electioneering — allowing religious groups to act as political operatives while maintaining their tax-exempt status — creates a loophole that would allow contributors to make tax-exempt contributions to a church with knowledge that the money would benefit a favored candidate.
Throughout the nation, neither church leaders nor their parishioners are clamoring for this bill. A recent survey by the Pew Forum on Religion and Public Life found that 70 percent of respondents said churches should not endorse political candidates, while only 22 percent backed church involvement in campaigns.
A closer look at the Pew Forum's results show that church politicking was unpopular among all tested demographic groups. For example, the report indicates that Catholics and mainline Protestants -- regardless of their level of religious commitment -- disapproved of church political endorsements by more than a three-to-one margin.
Similarly, pastors are not seeking the "help" these bills offer. Most clergy now strictly adhere to the law as it is written regarding candidate activity in their church and are not interested in turning their religious institutions into cogs in someone's political machine. This is a bad move for the church and for the integrity of the political process.
Many persons with whom I have only rare agreement have nevertheless expressed strong reservations on the proposals before you. Cal Thomas, the most widely syndicated columnist in the country, wrote in questioning these bills that "more politicians would be free to come to churches, taking time away from preaching about a kingdom not of this world in favor of earthly salvation."
Fox News Channel host Bill O'Reilly told me on air that he agreed with me and informed Rep. Walter Jones several nights later that: "I don't want the churches involved in the political process." It is little wonder. The moral authority of the church has always been highest when it played no partisan favorites and spoke its truth to the governing order without the fear of reprisal or the specter of special privilege from the powerful.
That taint grows whenever there is even the appearance of "buying" favor with political figures with the financial resources of the church: whether that is a sermon endorsement or an elaborate transfer of cash from church treasury to a party or a candidate fund.
I am not naïve enough to ignore the fact that these bills are directly related to one of the highly visible projects of Americans United for Separation of Church and State, an effort we call "Project Fair Play." Our program is a strictly non-partisan citizen effort educate about existing legal strictures against partisan activity by any institutions that are tax-exempt under Section 501 (c)(3) of the Internal Revenue Code.
"Project Fair Play" consists of several activities. First, we have produced, or have retained outside counsel to produce, a number of legal and practical memoranda and pamphlets to let churches know of the current law regarding participation in political activities. Although these documents do warn of violating prohibitions against intervention in campaigns, they also frequently detail the large number of perfectly permissible "political" activities that churches can engage in that inform community members about important issues and candidates seeking political office, but that fall short of utilizing the resources of the church to promote some specific candidates over others. For example, a church may host a "candidate forum" in their facility so long as they invite all candidates to appear. It is not the church's fault if some choose not to do so. Churches can also discuss the vital moral issues of the day and even endorse or oppose legislation, subject only to the far less restrictive language regarding lobbying contained in the Tax Code.
Second, though, when flagrant violations of the principle of non-participation in political campaigns are brought to our attention, we have (on 38 occasions) sent a letter to the Internal Revenue Service detailing our reasons for believing that a church has violated the provision prohibiting intervention in campaigns and should be investigated and penalized where appropriate. These letters are generally accompanied by additional evidence, from affidavits of church members to newspaper accounts, to demonstrate why we believe the entity has crossed a forbidden line. The activities we have reported have ranged from a $44,000 church-sponsored advertisement in a major newspaper urging the defeat of a Presidential candidate, distribution of highly slanted "voter guides" by political party members in church, direct pulpit endorsements, and collection of funds in Buddhist temples. In a few cases, we know that the complaints have led to enforcement actions by the Internal Revenue Service. However, unless an institution challenges a penalty in court or discusses it in the media, we do not know, nor are we entitled to know, the disposition of these complaints.
According to the chief sponsor of H.R. 2357, Representative Walter Jones of North Carolina, his legislation was born from anger over a letter we sent to nearly 300,000 houses of worship nationwide in 2000 outlining federal tax law and urging that churches seek their own legal counsel before passing out materials such as "voters' guides" of the Christian Coalition. Apparently a copy of this letter went to "a fundamentalist Baptist minister" in his district who was "stunned…that he could lose his status by just saying, 'Bush is pro-life, Gore is pro-choice.'" (Actually, it is not clear that any church could lose its tax exemption based on that statement alone.)
These comments obviously do not reflect the only reasons sponsors have for wanting to enact legislation on this matter. However, the comments about our work are based on two completely erroneous and unsubstantiated claims that have been repeated in dozens of press conferences and media appearances. I would like to set the record straight.
First, these bills are not necessary because pastors feel unable to speak to the moral issues of the day. It is a "red herring" of considerable dimension to allege that pastors, priests, rabbis, or imams are having their speech "stifled." Regrettably, this is the kind of misleading position staked out by Congressman Jones in a recent letter to the Washington Times (2/24/2002): "Houses of worship have always, since the Founding, spoken out on issues of the day. Simply because politicians also debate those issues -- from abortion to the death penalty -- churches are now required to be quiet because to speak out during an election cycle threatens government sanction and the loss of tax exemption." In fact, speaking out on issues is virtually unregulated by the Tax Code. No church has ever been penalized under the lobbying restriction in the Code for making moral statements on any topic. In fact, to suggest otherwise is to create the very chilling effect our letters supposedly generate. It is quite easy to talk about issues, stake out ethical positions, ask your congregation to seek out political leaders who adhere to those positions -- all without endorsing a specific party or candidate with the resources of your church. The one and only thing the valuable tax exemption requires you to give up is the right to endorse candidates; it is no different from the requirements that any 501(c)(3), religious or secular, would have to follow. The church on the corner is no different from the Red Cross or Americans United for Separation of Church and State.
The proponents of this legislation also continue to perpetuate the myth that either Americans United or the Internal Revenue Service or both of us is only concerned about the activities of conservative churches and religious institutions. This is demonstrably false. Indeed our first interest in this matter was the effort of the Reverend Jesse Jackson to hold a "Super Sunday" fundraising effort for his l988 presidential bid by having African-American congregations take up collections for his primary bid right during church services. We alerted the IRS to this planned activity and through the help of an "open letter" generated a spate of adverse activity that caused Mr. Jackson to back off. In other significant cases, we have reported the alleged fundraising in the Hsi Lai Buddhist Temple on behalf of the Democratic Party and Al Gore, the Democratic Primary endorsement of the candidacy of Al Gore over Bill Bradley by the Reverend Floyd Flake of New York (which he conceded led to an agreement with the IRS not to engage in similar activity in the future), and most recently the in-church electioneering permitted on behalf of a Democratic candidate for sheriff in Wake County, North Carolina.
Obviously, we have also pointed out the potentially unlawful conduct of churches seeking to provide aid to Republican candidates, including the pulpit endorsement immediately before an election of a former Congresswoman from Idaho was, among other things, extolled as "a prophet for our nation," the distribution of Christian Coalition voter guides in Idaho by the chairman of the local Republican Party (who was either very benevolent in passing out a wholly "objective" document or was seeking to promote the candidacies of the Republican candidates all obviously favored in the "voter guide"), and a pastor, speaking on behalf of his Philadelphia congregation, who endorsed GOP presidential candidate George W. Bush from his pulpit, while being broadcast via satellite to the Republican National Convention. Independent candidacies have also been the subject of complaints. We submitted material regarding what we considered the endorsement of Howard Philips of the U.S. Taxpayer Party in the presidential race of 1996 by a religious anti-abortion group called the American Life League, as well as a Pennsylvania's church endorsement of specific candidates in a non-partisan school board race.
When all is said and done, as a matter of tax policy and constitutional law, I believe it will be a sad day in America when her houses of worship begin to descend into the political fundraising world. Of course, some argue that if the church is uneasy with partisan politicking, it can just forego it. That may be easier said than done. If parishioners see the church across the street doling out dollars for politicians and then (quid pro quo or merely the appearance thereof) getting money under programs like the president's "faith based initiative," there will be strong pressure on church leaders to craft similar "arrangements." Churchgoers should be able to assume that their $20 bill in the collection plate will be used for the ministry and not shunted off to attack ads or political bumper stickers. If not, they might just let the collection plate pass by empty.
In all candor, the bills before you are unconstitutional, unnecessary, and unhealthy for both the church and the political process. I urge that they be rejected. Thank you for this opportunity to be included in this hearing.
ADDENDUM
I am writing to expand on some of the statements in my written testimony of May 14, 2002 concerning the interaction of Rep. Walter Jones’ H.R. 2357 and Rep. Phil Crane’s H.R. 2931 with the campaign finance laws, especially the Bipartisan Campaign Reform Act of 2002, which will go into effect after the upcoming election cycle.
There are several ways in which the contributions of church parishioners could be used for political activity. The most direct way would be for a church to open a political action committee (PAC) bank account for contributions, and follow relevant individual contribution caps and FEC reporting requirements for PACs. When soliciting political funds, the church would have to make clear to individual congregants contributing to the collection plate that a specific portion of their contribution will go to the PAC fund for political activity. The church would not be able to simply transfer money from the general treasury to the PAC bank account – the church must ensure that all PAC money came from individual contributions, and not from the church bake sale or spaghetti dinner. The church should also instruct congregants not to treat contributions that may be used for political purposes as tax deductible, because the IRS will likely treat these church PAC accounts as §527 accounts, contributions to which cannot be tax deductible. However, the church will retain its tax-exempt status for other activities.
Allowing 501(c)(3) religious organizations to operate PAC operations is just one of many ways that the Jones and Crane bills open new loopholes in the nation’s campaign finance system.
In addition to diverting collection plate funds to candidates, the PAC funds of unincorporated houses of worship could be used for other express advocacy activities, such as print and broadcast attack ads against candidates sponsored by the church PAC account. And it is clear that H.R. 2357 and H.R. 2931 would open the door to houses of worship engaging in partisan political activity through slanted “issue advocacy” advertisements. An example of an “issue advocacy” ad would be a negative message targeted at Congressman X followed by a request to “call Congressman X” and tell him you are outraged by his record. In addition to print and broadcast advertisements, the Jones and Crane bills would allow houses of worship to engage in direct mail, push polling and voter guides with the same negative partisan political message. However, assuming the new campaign finance law takes effect, these messages may be restricted 30 days before a primary and 60 days before a general election.
The bottom line is that the Jones and Crane bills would open outrageous new loopholes in the campaign finance system. And more disturbingly, H.R. 2357 and H.R. 2931 would be a corrupting influence on our nation’s houses of worship.