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Farris's gauntlet

Michael Farris, chairman of the Home School Legal Defense Association and chancellor of Patrick Henry College, has this article in USA Today. It is both heartwarmingly spirited in its defiance and disturbing in its predictions.

Farris takes the omens from the discussion of tax exempt status and homosexual "marriage" before SCOTUS recently in oral arguments. As Farris notes, Justice Alito asked Donald Verrili, who was arguing on behalf of the federal government in favor of imposing homosexual "marriage" on the entire country, whether the Bob Jones precedent would be used to strip tax-exempt status from Christian schools who refuse to recognize homosexual "marriage." Verrili replied, "It's certainly going to be an issue," implying that this could indeed happen.

Farris's concerns about Christian colleges are well-founded, and his point that stripping of tax-exempt status would cause many colleges, even those who don't accept government money, to founder, is simply correct in practical terms.

I have done a small amount of reading up on the decision in Bob Jones v. United States. I admit, I have used Wikipedia for this purpose, as I don't have time right now to do what I would prefer to do and get hold of the decision itself and read it. Readers who believe that the summary I have accepted is incorrect on a point I highlight are most welcome to correct my impression.

I think it very likely that if the SCOTUS ruling goes the wrong way, the IRS will change its regulations to give tax-exempt status only to private schools that don't "discriminate on the basis of sexual orientation" and will try to strip that status from many Christian private schools. A case for a religious exemption will be filed and will go up to SCOTUS, and there is a very real danger that SCOTUS will decide, as it did in the Bob Jones case, that the government interest in preventing such "discrimination" outweighs the burden placed on religious liberty by stripping tax exempt status.

However, I am a little surprised that Farris (who is a legal eagle if there ever were one) and others have been so quick to assume that the precedent would be applied to churches as well. Farris points out that churches are governed by the same portion of the IRS code as Christian schools. But it appears that the SCOTUS precedent in the Bob Jones case was expressly stated to apply only to schools and not to "churches or other purely religious institutions." Here I'm assuming that the Wiki author actually read and is quoting the original opinion, but I might have expected Farris to make reference to that restriction.

Prima facie the Bob Jones precedent could not be directly ported over to churches. Of course, while we're making predictions, we may predict that the lawless court would extend the ruling to apply to churches as well. Or what might happen (this seems rather plausible) is that in any legal tussle over IRS action against a Christian college, a new "Bob-Jones type" ruling against that Christian college would coyly neglect to state whether the new precedent being set did or did not apply, as the Bob Jones precedent explicitly did not, to churches. This would leave churches open to IRS harassment and require more years of litigation to determine.

I think the solemn warning concerning colleges is completely apt. And certainly churches who run a Christian K-12 school should assume that the warning applies to their schools as well. (Some small Christian K-12 schools even have joint budgets with the church that runs them, which raises all kinds of issues for tax-exempt status if the school should lose it.) Also, as we have discussed before (and there are legal reasons for this in some state law) churches that, for a fee, rent their buildings for weddings should start now to restrict that use to members or in some other clearly religious way so that they are not caught by "public accommodations" laws.

But it seems to me that churches per se may be in somewhat less danger than Farris implies of losing their tax-exempt status by IRS imitation of the Bob Jones scenario.

This is worth saying but is fairly cold comfort as we contemplate the possible destruction of Christian private school education from childhood through college throughout the United States. For so many years I attended Christian schools myself and would sometimes hear someone--a pastor, principle, or professor--remind us how fortunate and blessed we were to have "the freedom to meet here." It is a sobering thought that that freedom for Christian schools may be ending and that direct government tyranny, shutting down Christian schools for being Christian, may be on its way. I am glad to see Farris and Patrick Henry ready to fight the good fight in good heart and never to give in. We need more of that fighting spirit, though we don't know what will come. May God defend the right.

Comments (15)

I dont have the link, but on another blog someone pointed out the possibility that if an institution loses its tax exempt status over this issue that they may then be regulated as a for profit institution and accordingly subject to all applicable anti-discrimination laws. If that is the case, losing tax exempt status may just make it even easier for people to sue such institutions into oblivion. I admit this sounds like a stretch, but who knows these days.

I also think that the churches are better protected than schools at the moment, but more because people dont (yet?) want to go there. That said, it seems to me that our presence in the population may be at just the right level that we remain a significant threat but do not have the political resources to really protect ourselves (between 20-40% perhaps). I think this more than anything in a previous Supreme Court case (Bob Jones) is going to have impact on if churches are made to suffer for not endorsing homosexual behavior.

DR84, I think SCOTUS or some federal court (whose ruling SCOTUS might choose to leave in place) would have to rule specifically on the tax-exempt issue for churches, because SCOTUS does address such cases under the First Amendment. Any church whose tax exempt status was revoked for this reason should certainly file a federal case against the action on first amendment grounds, and then we would see what we would see.

I am just now coming to realize what a big deal the Bob Jones ruling was. It was particularly ominous because the Supreme Court explicitly ruled that the government's interest in forbidding discrimination (in that case, racial discrimination) trumped the school's religious liberty interest. That's a big, big deal, because prima facie it means that the IRS's actions passed "strict scrutiny," which is an important con-law concept.

As far as domino effects if a Christian institution (like a college) had its federal tax-exempt status revoked, they would not be automatic or strictly necessary, but they would be probable. Local and state governments decide things like local property tax exemption, but a hostile local venue might well copy the federal government and revoke such an institution's exemption for property taxes, which would be ruinous for any college that owns significant property (which of course any residential college does). If there were a high federal court precedent in place for "sexual orientation" discrimination and stripping tax-exempt status, it would be clear that a college socked with massive property taxes at the local level would have no recourse in federal courts claiming religious exemption.

There are two aspects to tax exempt status that come into play. First, exemption of the religious entity from paying tax, and second, the 501(c)(3) status that allows contributions to said institution to be tax deductible by the donor. I could see a situation where, on First Amendment grounds, the SCOTUS says a Church cannot be taxed for refusing to get on board with the gay agenda because that would be Church/State entanglement (which should cut both ways), but also ruling that contributions to such Church are not tax deductible by the donor because that is between the IRS and the donor, not the IRS and the institution.

For most Christian universities, they probably don't even need to be Bob Jonesed. Withholding federal grants, and federal student aid/loans, etc. would probably be enough to do many, if not most of them in.

C. Matt, I gather there was no question of separating those two senses of "tax exempt" in the Bob Jones case.

You are doubtless right about acceptance of federal money, but there are a small number of colleges and a much larger number of K-12 Christian schools for whom that would not be the issue. Farris emphasizes that Patrick Henry has kept free of all federal funds, but having their 501c3 status yanked would be a huge problem because they rely so much on donors. I'm sure that if their local entity also started charging them property tax on their campus (see my previous comment) that would be an absolute killer, with no ifs, ands, or buts.

It is sobering to reflect that this could filter down even to the fiercely independent and often financially struggling K-12 American Christian schools--I mean, e.g., the ones run by Baptist churches who did not listen to the siren song of "faith-based initiatives" and have always refused government money for precisely these sorts of reasons. But they have to have their donation flow or they die. If 501c3 status is revoked, that could just kill it right there.

matt, you are probably right about grants and loans - many Christian schools have them built into their budget assumptions. However, since there are other similarly situated schools that DON'T, it should at least theoretically be possible for a number of the ones who currently accept federal aid to change their model. Perhaps the full-paying Christian public isn't large enough to support all of them that way - but that's OK anyway, since many Christian schools aren't actually Christian any more (I am speaking especially of certain Catholic ones, like those "in the Jesuit tradition" which ceased to be Christian many years ago in all but name) and should go away anyway. What we would then need is a good winnowing out process whereby only the good schools are left drawing on the donation resources of decent Christians.

Since most Christian schools make nothing even remotely like a "profit" anyway (relying quite significantly on outright gifts in addition to tuition), the college itself being subject to federal income tax would be an irrelevancy, wouldn't it? Certainly a significant amount of donation money would dry up if there is no individual tax deduction for the gift, but it's at the large donor level that this matters. Seems to me that the place where that really comes home to roost is the private foundation's requirement to give only to "charitable" causes, would they be able to give money to a school that is no longer a 501(c)(3) entity? Could a private foundation establish a tuition / scholarship fund for needy students whose design was focused on a students of specific school (or small cadre of schools) even if those schools are no longer tax exempt? Seems to me that's plausible - the money goes for students in need, not for the college.

The local property tax bite would indeed also be a killer, to most colleges.

Tony, it probably depends on the school, but I'm sure many of these schools depend on large donations directly to the institution, not only on scholarships to students.

My guess is that if and when it goes bad, Anthony Kennedy will be the one who casts the vote that drives us off the cliff. He's terribly unreliable and yet another reason why I think future generations will look at Ronald Reagan and say that while the man meant well and was effective against the Soviets, his legacy was absolutely ruinous for the conservative movement.

Well, without getting into the whole question of "Reagan's legacy," it's certainly no question that Kennedy himself has been a disaster. It's just possible that in this particular case he will decide that it's time to show that he's _truly_ unpredictable and side with sanity for a moment. It's also possible that Roberts will again go the wrong way, as he did on the individual mandate in Obamacare. So who knows.

but I'm sure many of these schools depend on large donations directly to the institution, not only on scholarships to students.

They sure do, Lydia. However, if these dried up, a different budget model would be theoretically feasible: increase tuition by 40% (to represent the real cost of educating), and then get the same old foundations and wealthy individuals to donate to "tuition assistance" programs not directly tied to the school - student based not school based - but with a close _practical_ relationship to the Christian school.

It's also possible that Roberts will again go the wrong way, as he did on the individual mandate in Obamacare.

I doubt that even Roberts can manage to fudge himself into thinking that there is a valid case on the pro-gay side of the marriage issue. And unlike the Obamacare problem, which is only indirectly a moral problem, the gay marriage problem is directly a moral problem - for everyone who has to perform services, at the minimum. Even Roberts isn't going to slough off that difference, I think.

Kennedy, though, who knows? I guess he will know by the time he finishes writing up the majority opinion, but perhaps not before. Will he be the man who goes down in history as the one who pulled the respirator plug on western civilization? As the man who finally held the line for sanity?

I can't speak to the relevant case law there, Tony, nor speak very well to the financial end. (Obviously, raising tuition would tend to discourage students unless all students were guaranteed scholarships that offset it.)

But I do have a pretty strong sense that the IRS and co. have a way of "following back" the thread of tax-exempt status or other, similar statuses. Here's an example: Many parents have been encouraged to put money into educational savings accounts that are exempt from state and federal taxes. But in order for you to use the money from such an account, you have to use it for a school that is on The List. Even as things are *already*, Patrick Henry College (and I believe not Hillsdale, either) is not on The List. And this is *just* (apparently) because they refuse federal funds. They still have tax-exempt status, but they don't have enough status to be on The List for being able to use your educational savings account for them. Or at least so it was when I checked matters out some years ago. Apparently The List is also used for National Merit Scholarships. PHC didn't make it on there, either. And it's accredited, too. So it isn't an accreditation issue. It's apparently something to do with entanglement with government.

So it seems to me pretty plausible that something like The List would govern the question, "Can this charitable foundation donate money, which it is supposed to donate to charitable causes, to students for tuition where said tuition will be spent at schools that are not deemed educational institutions for IRS purposes?" I find it hard to believe that this would not all be tracked down, so I'm pretty sure the answer would be, "No." Because if the IRS has, in essence, stated that the school isn't a real educational institution for purposes of its categorization, then giving grants to students to go there can be treated like giving them grants to go to Acupulco or do other luxurious or unnecessary things (rather than getting an education). Hence, not charitable giving.

Sounds like if Christian schools really do lose their tax exempt status that even if we can dream up all kinds of loopholes, those loopholes have probably all been (or will be) closed. Much like the loopholes dreamed up for those in the wedding industry facing SOGI anti-discrimination laws have been closed.

If the decision goes well for us, it will only be temporary. If poorly, well, Psalm 137.

Well, without getting into the whole question of "Reagan's legacy," it's certainly no question that Kennedy himself has been a disaster.

In many ways, every major battle we face today had Reagan's fingerprints on them...

1. He implemented no fault divorce in California.
2. He played a role in legalized abortion in California.
3. He gave the general amnesty to illegal aliens that destroyed the Republican Party in California and created the precedent for the current efforts.
4. His work in Afghanistan helped create the Taliban and Al Qaeda and energized radical Islam by giving them victory over the Soviets.
5. His judicial nominees were moderates at best, quasi-liberals at worst for the most part.
6. EMTALA, which created the emergency room problems we have today, was passed on his watch.

A number of the issues you and others have written about here, including this one, are partly his fault.

Mike, can it. The stuff in California was earlier in his career, and he himself said that he had a change of heart on abortion thereafter, and I consider that backed up by his actions later.

The amnesty was a big mistake. His judicial nominees were a mixed bag. (Scalia is a very great man and a great jurist, even when I do not always agree with his decisions.) I could write a treatise myself on how we came to get such a mixed bag of judicial nominees from Reagan, as I have my own strong opinions (and I daresay rather interesting ones, if I say so myself), but I'm not going to write it here.

The question of what Reagan did or did not do, etc., is a large one, a question on which the reactionary right likes to pick up leftist talking points and relay them as gospel, and I don't mean to discuss it here.

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