Tax Reform Measure Passes Senate w/o Repeal of Johnson Amendment Attached
Monday, December 4, 2017
Nonprofit Quarterly has written about the dangers of the GOP tax reform bill moving through Congress. NPQ’s editors distributed a letter last Thursday from Tim Delaney, CEO of the National Council of Nonprofits, expressing strong opposition to both the tax changes included in the bill and the philosophical change represented by repeal of the Johnson Amendment.
Today’s news is that the repeal language written into the version of tax reform passed by the House last month was not included in the Senate version passed after midnight last Friday by a vote of 51–49. All Democrats voted against the Senate bill; Sen. Bob Corker (R-TN) was the only GOP senator to vote “no,” citing concerns about congressional Joint Committee on Taxation estimates that forecast the measure increasing the national debt by $1 trillion over ten years, after accounting for increased economic activity. The most likely scenario moving forward is that the differing House and Senate measures will have to be reconciled before the measure can be sent to the President for his signature.
The House-passed version of tax reform, officially known as H.R. 1, may be found here. The Senate took the House bill and completely rewrote it while incorporating many of the provisions in the bill. The Senate version may be found here. It’s still called H.R. 1, but it’s a very different bill.
Repeal of the Johnson Amendment has been taken up, as most readers know, by some evangelical churches and conservative political candidates. President Trump took up the issue in the 2016 campaign and, at the 2017 National Prayer Breakfast, promised to “totally destroy” the Johnson Amendment.
Named after then-US Senator Lyndon Johnson (D-TX), the amendment was adopted by the Senate on a voice vote as part of tax reform in 1954. Specifically, the amendment added the italicized clause to the end of the IRS definition of 501c3 organizations:
Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does 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.
The parenthetical “or in opposition to” was added to the definition in 1987 to clarify and further emphasize the comprehensive prohibition of political campaign activity by 501c3 entities, including public charities, private foundations, and religious congregations.
Johnson Amendment repeal advocates see the issue as one of free speech, especially for church leaders who believe they should be able to speak to their congregations and communities to endorse or oppose candidates in the context of their faith and the tenets of their religion. Supporters of keeping the prohibition as it is desire to maintain the nonpartisan nature of charity, particularly in hyperpartisan times. They believe that allowing charities to choose to become politically active in campaigns will erode public support for all charities, regardless of whether a particular charity chooses to identify itself for or against a candidate. They also believe that tax deductible gifts should not be used for political campaigns, as use of the charitable deduction by donors would constitute indirect taxpayer support for the donors’ and charities’ preferred candidates. NPQ took a formal nonpartisan position opposing the repeal of the Johnson Amendment earlier this year and remains committed to opposing it, regardless of what legislation accompanies it.
Typically, when the House and Senate pass different versions of the same bill, each chamber appoints members to form a joint conference committee to negotiate changes likely to satisfy a majority of both bodies. The compromise bill would then be presented to both the House and Senate for approval before being sent to the White House.
With the razor-thin margin of passage in the Senate and the last-minute deals necessary to secure support from holdout GOP senators, however, some experts are predicting that pressure will be applied to have the House pass the Senate version without additional changes. Some bill supporters fear that the Senate may not be able to pass the bill a second time, especially if the last-minute deals aren’t included and significant House provisions deleted from the Senate version are restored.
Both nonprofits and advocates supporting or opposing the GOP tax reform package generally, and those supporting or opposing repeal of the Johnson Amendment specifically, have time to contact their senators and representatives to make their opinions known. A few points to keep in mind:
- Legislators listen and respond to individual contacts from their constituents only. Don’t waste time contacting all House and Senate members unless yours is a national organization with operations in all states.
- Use the telephone. Events are moving too quickly to rely on letters. Also, no one has time to read through faxes or emails trying to interpret exactly what you support or oppose.
- If possible, find board members, donors, and other supporters who have a personal relationship with their senator, representative, or key staff members.
- Keep your message simple.
- Don’t use prepared text unless you are part of a large campaign doing the same thing. Use your own language.
- Be both assertive and polite. Congressional offices are hypersensitive about threatening language and hyperbole.
- For most 501c3 organizations (like NPQ), this won’t be an issue, but be mindful of the “no substantial part” (of activities) limitations on lobbying that apply to nonprofits.
Finally, watch news reports to learn whether a conference committee is being convened. If your senator or congressperson is appointed to the conference committee, it presents you with an additional opportunity to influence the shape of the final bill.
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