The "Unite the Right" rally in Charlottesville, Va., shocked many Americans with its unashamed and open embrace of white supremacist and Nazi ideology. It set off a passionate national discussion on how to best deal with racism and racist groups. There is an unconventional starting point: revoking the tax exemption of white supremacist groups.
We suspect that many Americans would also be shocked to learn that a number of white supremacist groups — including the New Century Foundation, which hosts an annual conference that has included neo-Nazis, white supremacists, Ku Klux Klan members, Holocaust deniers and eugenicists — are exempt from taxation. (The National Policy Institute, directed by Richard Spencer, was another, until it lost its tax-exempt status this year after failing to file federal tax returns.) A recent Associated Press report said that over the past decade, four prominent white nationalist groups alone received over $7.8 million in donations.
Like museums, churches and schools, these groups do not have to pay taxes on a majority of their revenue. Donors to these groups can deduct their gifts, and real estate that the groups own is generally exempt from property taxes. In addition, in the eyes of the organization and the public, being tax-exempt confers a certain legitimacy.
The I.R.S., the agency in charge of enforcing these rules, must decide whether groups qualify for tax exemptions. It makes that decision impartially, meaning that organizations that, say, promote racist ideology are generally eligible for nonprofit status as long as they are organized for a qualifying purpose and otherwise meet the criteria for exemption. For many white supremacist groups, that claim is on educational grounds (established by I.R.S. criteria). After all, many on the far right, like Mr. Spencer and the operators of organizations like VDare, declare that they do not hate others but rather promote whiteness.
But some viewpoints are fundamentally untethered from American values and should no longer receive any state support or endorsement. We are not arguing that such despicable views be excluded from the public sphere; free speech is too important a value to dismiss just because some people's speech is repugnant. But under current law, tax exemption represents something more than merely permitting free speech.
In 1983, the Supreme Court declared an extra-statutory rule for tax exemption — the "fundamental public policy" doctrine. In Bob Jones University v. United States, the court held that the I.R.S. could constitutionally revoke the tax exemption of a religiously affiliated university because its racist policy violated a "fundamental public policy."
The court did not explain how to determine when a societal value became a fundamental public policy. But it pointed out that the courts, the executive branch and the legislative branch had all been working to eliminate school desegregation; that concerted effort indicated that nondiscrimination in schools was a fundamental public policy.
Despite the rhetoric of various white supremacist and white nationalist groups, an important bipartisan consensus emerged out of the chaos of the Charlottesville rally: Advocacy of white supremacy and hatred by the K.K.K., neo-Nazis and the far right are not acceptable public viewpoints. Robust denunciations came from politicians across the political spectrum and included leading Republican politicians like Mitch McConnell, the Senate majority leader, and Paul Ryan, the House speaker. The list also included members of the executive branch, including Attorney General Jeff Sessions and Vice President Mike Pence.
If it was not clear that white supremacy violated a fundamental public policy in the era of the Bob Jones case, it is clear now. The widespread condemnation of racism expressed by both the executive and legislative branches of the government provides convincing evidence that white supremacist actions violate fundamental public policy. Thus, those organizations that advocate white supremacy and organize white supremacist events do not qualify as tax-exempt under the Supreme Court's reasoning, and the law requires the I.R.S. to revoke their tax exemptions.
If the administration is going to "take the most vigorous actions" against white supremacists and neo-Nazis, the first step would be to review and revoke the tax exemption for any organizations that espouse these ideologies.
How will the government determine which organizations violate this fundamental public policy? Certainly, any group that sponsors violence against racial or ethnic minorities should not qualify for a tax exemption. Moreover, any group that proclaims the superiority of whites, or supports the separation of the population by race, should be scrutinized. Where an organization's mission statement suggests a focus on the superiority of whites, or the inferiority of other groups, the I.R.S. should look closely at what the group does. (Though surprising, it is not unheard-of for a group to explicitly state its white supremacist purposes. The New Century Foundation, for example, says in its mission statement, "We also believe the European-American majority has legitimate group interests now being ignored.")
Unless the I.R.S. is able to determine that an exempt organization does not advocate a racial policy that violates the fundamental public policy against white supremacy, it should lose its exemption.
Since the Bob Jones decision, the I.R.S. has been reluctant to apply the fundamental public policy doctrine. With exceptions that could be numbered on one hand, the I.R.S. has invoked fundamental public policy only to revoke the exemptions of private schools that discriminated on the basis of race. Moreover, after accusations that the I.R.S. discriminated against Tea Party groups by delaying or denying their applications for nonprofit status, the agency has been treading more carefully than ever.
The case of white supremacist groups is different: Politicians and citizens on the left and the right have recognized the odiousness of white supremacist groups.
To be clear, public charities have an important historic role in espousing minority and unpopular views, and these groups should not be punished or censored simply because of their speech. Moreover, their articulating their bad ideas ultimately leads to society's forcefully refuting those ideas, which, in the end, makes the cause of anti-racism stronger.
But a tax exemption is something different. The Constitution protects these groups' right to free speech, but it doesn't promise anyone freedom from taxes.
This opinion piece by David Herzig and Samuel Brunson appeared in The New York Times today.
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August 29, 2017
Addendum. FRom Business Insider, August 15, 2017• Many white supremacist groups qualify as tax-exempt non-profits.
• Those organizations are not required to pay federal taxes, and donors are able to deduct contributions on their personal taxes.
• Some experts believe the IRS definition of "educational" activities should be limited to exclude advocacy groups.
In the eyes of the IRS, many white supremacist groups are on par with the United Way, American Cancer Society, or the Wounded Warrior Project — at least in terms of their tax obligations.
That's because many advocacy groups, including white supremacist organizations, qualify for tax-exempt, non-profit status due to their engagement in activities that can be classified as educational by the IRS.
Most non-profit organizations in the US do not pay federal taxes, and donations from supporters qualify as a personal tax deduction.
According to the IRS, "an organization may be educational even though it advocates a particular position or viewpoint, so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion."
But, the extent to which organizations achieve this neutrality is not closely monitored. Applying for — and being granted — non-profit status in the United States is managed exclusively by the IRS. Only 54 of the 92,129 applications for tax-exempt non-profit status filed last year — 0.05% — were denied.
Read more here. http://www.businessinsider.com/white-supremacist-groups-tax-break-educational-2017-8