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Editor: Paul L. Caron, Dean
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Wednesday, September 13, 2017

Herzig & Brunson: Let Prophets Be (Non) Profits

David Herzig (Valparaiso) & Samuel D. Brunson (Loyola-Chicago), Let Prophets Be (Non) Profits,  52 Wake Forest L. Rev. ___ (2017):

In this article, we take a step back and ask whether the Supreme Court’s application of the fundamental public policy rule as espoused in the Bob Jones case is the normatively correct position. In our analysis, we conclude that using fundamental public policy as a filter in granting tax exemption gets both tax and public policy wrong. Our conclusion is informed by the history of the role played by public charities espousing minority views. We believe that a legitimate space in society should exist and populated by nonprofits to both espouse popular and unpopular minority views. But it is also informed by tax policy: applying the fundamental public policy rule to qualification for tax exemption misunderstand how exemption fits into the corporate income tax.

Ultimately we conclude that homogeneity of viewpoint is normatively detrimental to a robust society. Therefore, in order to allow nonconforming views, we propose that the proper sector to house those views is in an expansionist version of the nonprofit sector.

Scholarship, Tax | Permalink


The authors are barely coherent: "At the same time, the government has no obligation to subsidize
bad speech. In Bob Jones University v. United States, the Supreme
Court announced that the IRS could constitutionally revoke the tax
exemption of a religiously-affiliated university because of its racist
policy." How do they not understand the difference between speech and conduct (ie, policy)?

Posted by: john | Sep 14, 2017 5:48:37 AM

This paper contains a good argument for why the tax exemption is not a subsidy but a poor argument for why tax law should be used as a means to encourage or discourage minority or majority opinions, regardless of their truth value.

"Disqualifying deductions, rather than exemptions, will make it easier for the IRS to enforce fundamental public policy, will provide better leverage for encouraging tax-exempt organizations to act in socially- acceptable ways, corresponds better with tax policy, and allows tax- exempt organizations to give voice to unpopular minority opinions.

And once the tax-exempt entity quit violating fundamental public policy, it should again receive the subsidies that other public charities receive. In other words, focusing the fundamental public policy rule on the deductibility of donations allows the fundamental public policy rule to function both as a stick and as a carrot. It not only punishes bad behavior, but it rewards shedding that bad behavior."

This compromise reminds me of a quote from "A Raisin In The Sun".
"He talked Brotherhood. He said everybody ought to learn how to sit down and hate each other with good Christian fellowship."
(p. 91 In this quotation, Beneatha explains to Mama how Lindner came to bribe the family in order that they would not move to Clybourne Park.)

"While a private school’s discriminating on the basis of race clearly violates fundamental public policy", it also denies the self-evident, universal truth that every son or daughter of a human being has been endowed by God with the unalienable Right to Life, to Liberty, and to The Pursuit of Happiness, the purpose of which is what God intended.

Which brings us back to the beginning-
While "the government had a policy against subsidizing racial discrimination in education, public or private", there is no government policy against discriminating between appropriate and inappropriate sexual acts and sexual relationships.
Regardless of sexual desire/inclination/orientation, a man remains a man, and a woman remains a woman, and while it may be permissible for men and women to engage in consenting sexual acts of any nature, no person or State has the authority to coerce any person into condoning the engaging in or affirmation of any sexual act outside the marital act, which is Life -affirming and Life-sustaining, and can only be consummated between a man and woman, united in marriage as husband and wife. It is important to note that in order to respect the "equal dignity and stature of its male and female citizens", one cannot deny the essence of their complementary nature as sons, daughters, brothers, sisters, husbands, wives, fathers, mothers.

Posted by: N.D. | Sep 14, 2017 7:54:17 AM