Tax Plan Twist: Churches, Charities, Candidates

With Republicans on Capitol Hill and in the White House desperate to post a big legislative win, their push for so-called tax reform – the label being used to sugar-coat costly tax changes mostly benefiting profitable corporations and the wealthiest among us – has reached red-line intensity.

On the merits, the tax plans now being bulldozed through Congress have little to recommend them in terms of helping the economy or making the tax system more fair. Which unfortunately is beside the point. This is all about giving GOP chiefs and President Trump – beset by one failure and distraction after another – an outcome capping 2017 with an accomplishment catering to their biggest supporters and restoring some momentum heading toward a mid-term election year.

Even if the promise of lower taxes becomes an illusion for many in the middle class, as it no doubt would, a tax-reform victory would help Trump and his allies counter the understandable impression that they’re nowhere close to having their act together. The investigations swirling around Trump and his campaign’s contacts with Russia have provoked him into behavior that becomes even more disturbing, as when he cozies up to the thuggish president of the Philippines and, yes, to Vladimir Putin.

So along Pennsylvania Avenue, the pressure is on – just the sort of legislative climate that can breed all manner of mischief as high-priority bills get larded up with goodies sought by one special interest or another.

Campaign offering plates?

Right on cue, then, comes yet another attempt to lower the barriers that now help shield tax-exempt charitable organizations from being dragged directly into partisan politics. Or, just as important, that help prevent charities so inclined from leveraging their tax privileges to magnify their political clout.

Whether such an organization is a church, a foundation or some other kind of group supposedly trying to act in the general public interest, federal law now bars it from specifically supporting or opposing candidates if it wants to retain its tax-exempt status. That, of course, is a powerful inducement not to become just another campaign combatant.

Lifting the law, known as the Johnson Amendment because it was engineered by Lyndon B. Johnson when he was the Senate’s Democratic leader back in the 1950s, would have troubling consequences. Charitable groups that did decide to take overt sides in political campaigns would become magnets for contributions from partisans eager both to support their favored candidates and to get a tax deduction.

Donors to a church, university or secular public-interest organizations – a radio station, for example – now can take such a deduction. Donors to political campaigns can’t. So churches and charities would be tempted to align with campaigns as a fundraising tactic. The potential for disruptive internal conflict would be immense.

Scrapping the Johnson Amendment as it applies to religious groups has been seen as a way for Republicans to let their allies in conservative churches take more active political roles, promoting conservative agendas such as lower taxes, weakened environmental protections and less public investment in health care. The same options for greater political involvement would of course be available to congregations with more progressive outlooks.

Yet progressives typically aren’t the ones looking to inject even more money into the political system – money that can tilt the scales toward self-serving special interests. From the progressive standpoint, and that includes the standpoint of the North Carolina Council of Churches, it’s fair to say that support for the amendment is both philosophical and pragmatic.

The amendment survived a repeal effort earlier this year, to the dismay of religious conservatives who loom large among the base of Republican voters. But the pending tax legislation has offered a second bite at the apple – this time, in concert with other groups organized as charities that also are eager to be upfront about which candidates they favor. It was the chairman of the tax-writing House Ways and Means Committee, Texas Republican Kevin Brady, who ramrodded the proposed change, inserting it in the House tax bill hours before a key vote.

Loss of separation

The group Americans United for Separation of Church and State denounced the move for its potential influence on elections. “Under the new provision,” it said, “a pastor could endorse one or more candidates. The church could then post videos of each sermon on its website, email it to parishioners and distribute it publicly on social media. The church could also endorse a candidate in the adult Bible study that takes place each week, and in every bulletin, email or newsletter issued by the church. In addition, the president of a major university could insert an endorsement into its weekly newsletter that is emailed to current students and its massive alumni network.” Churches and other charitable organizations essentially could wind up selling their support in the political marketplace.

The group released a letter  it said had been signed by 4,000 faith leaders from across the country. Those leaders “are called to speak truth to power, and we cannot do so if we are merely cogs in partisan political machines,” the signers declared. “The prophetic role of faith communities necessitates that we retain our independent voice. Current law respects this independence and strikes the right balance: houses of worship that enjoy favored tax-exempt status may engage in advocacy to address moral and political issues, but they cannot tell people who to vote for or against.”

Pastors can express their own preferences, exercising their right to free speech. For that matter, an organization such as the Council of Churches can and does signal its agreement or disagreement with elected officials’ policies – signals that anyone is free to consider in deciding for whom to vote. But going so far as to accept contributions in exchange for making outright campaign endorsements would be a risky step for any group that wants to be welcoming to people who may have different views.

Letting all charitable groups engage in active partisan politics also would come at a cost to the federal treasury, as political activists channeled contributions in ways allowing them to claim tax deductions. If the Johnson Amendment repeal were limited to religious organizations, congressional analysts put that cost at some $2 billion over 10 years. Obviously, the change approved by Brady’s committee could cost much more.

Cuts — and hikes

But Republican lawmakers are in a giving mood. Their tax legislation is designed mainly to reduce federal tax burdens on corporations and people at the top of the income ladder. The House version, to be voted on first, offers tax cuts worth some $5.9 trillion in the first decade, offset by $4.5 trillion in revenue-raising measures – in other words, $1.4 trillion in the hole.

The cover story is that tax cuts – in the form of higher standard deductions, for example — will help the middle class as well, letting them keep more of their money and spurring job creation. But many middle-class folks actually would see their taxes go up, what with the loss or reduction of various tax breaks such as the deductibility of state and local taxes, medical expenses and interest on student loans. And while the trickle-down theory of economic growth is near and dear to conservative hearts, so far it’s been mainly a case of wishful thinking.

Returning from his trip to Asia, President Trump urged the Senate to bundle repeal of a key element of the “Obamacare” health insurance program – the requirement that people be insured or pay a penalty – with its tax bill.

The idea gained traction as Senate leaders seized on it as a way to channel more money into tax cuts for the middle class, while also moving ahead with their long-standing, long-frustrated goal of getting rid of the Affordable Care Act. Neither Trump nor top Republican senators seem to give a hoot that without the individual mandate (the cost of which in many cases is taxpayer-subsidized), an estimated 13 million Americans will fall into the ranks of the uninsured over the next 10 years – backsliding on the ACA’s progress toward better health care for all.

The Republican hope on Capitol Hill seems to be that the tax reform push – probably the last shot for the party to bag a major trophy after a mediocre year – will generate a kind of stampede. That would make it even harder for independent-minded GOP senators such as Arizona’s John McCain, who foiled a previous effort to repeal the Affordable Care Act, to resist the flow.

As for standing in defense of the Johnson Amendment and the principle that charitable groups shouldn’t become auxiliaries of partisan campaigns, any Republican who would try to do that risks being swept aside amidst the tax-cut frenzy. But for someone who can manage to hold the line against partisan expediency, here’s a chance to be a hero.