Thursday, June 27, 2013

Could The Supreme Court's DOMA Decision Spell The End For Tax Exemption of Religious Organizations?

Thirty years ago, the Supreme Court affirmed a decision of the Internal Revenue Service that Bob Jones University and Goldsboro Christian School were not operating as charitable organizations entitled to exemption from taxation under federal law.

The effect of the Supreme Court's decision was significant.  The schools lost their status as exempt from income taxation, and the schools' supporters lost the benefit of tax deductibility of their donations to the schools.

The loss of tax exemption is, for want of other words, a kind of capital punishment for organizations that depend on donations to engage in their charitable enterprises.  That punishment was imposed on the schools because, in the analysis by the IRS and the Supreme Court, they acted contrary to settled public policy by maintaining standards that discriminated on the basis of race.  Bob Jones, for example, prohibited interracial dating by students matriculated at the University.  Goldsboro Christian limited admission to school to Caucasians.

In 1970, an appeals court decision enjoined the IRS from recognizing as tax exempt certain racially discriminatory private schools in Mississippi.  Thereafter, the IRS announced its adoption of an interpretation of the Internal Revenue Code under which policies of racial exclusion would invalidate application for tax exempt status.  It was that decision that placed the status of Bob Jones and Goldsboro Christian in issue.

So what does the thirty year old Bob Jones University decision have to do with the DOMA decision of the Supreme Court?

Well, up until this DOMA decision, it could hardly be claimed that the settled law of the land was that denying access to marriage to same sex couples was a form of discrimination so wrong as to violate public policy.

After the DOMA decision, the question is fairly raised by Justice Kennedy's opinion for the Court, whether denial of "equality" of access to marriage for same sex couples constitutes a form of discrimination that the Constitution of the United States prohibits.

If Kennedy's decision is a clarion against prohibited discrimination, then there is no reason in the law to distinguish between the discriminatory denial of educational access based on race and the discriminatory denial of marital access based on gender.

I do NOT think we have arrived at that point in time.

I DO think that sharp language from Justice Kennedy critical of Congress' motivations -- charging the Congress, essentially, with base and injurious intent -- sets the stage for the day when individuals who are refused a request to be married in a particular church will turn to the IRS and ask how, in these days -- it can be consistent with public policy to harbor such discriminatory contempt for them.

And that is why the Bob Jones case should scare churches, synagogues and mosques.