Being “Tax-Exempt” Doesn’t Guarantee “Free Speech”

9 November 2008

A few weeks ago, 33 pastors, backed by the Alliance Defense Fund, decided to endorse candidates from the pulpit in direct contravention of 501(c)(3) laws.  Their argument?  Constitutionally protected free speech.

I’m seeing the same meme show up in comments.  Let’s get something straight: no law is telling any church what their leaders can or cannot say.  But tax laws restrict what kinds of things an organization can say in order to qualify for tax-exempt status.  If you want to have completely free speech, don’t ask the taxpayers for a handout in the form of tax exemptions.  The Treasury needs to remain impartial, particularly with respect to candidates for public office.

Another important reason for this rule is that the government wants to be sure that political contributions are always taxable.  Taken to an extreme, if pastors were allowed to endorse candidates and engage in any political discourse they liked, then candidates could set up shell churches, get 501(c)(3) tax exempt status, and have their supporters donate to these churches and get a Schedule A charitable deduction for, you guessed it, a political contribution.  And one more thing — the church would be exempt from disclosure rules too.  The only way to prevent these abuses is to draw a bright line between tax-exempt organizations and influencing legislation and endorsing (or opposing) candidates.

Accepting tax-exempt status means that you tell the government — and the people — that your organization is going to act in the general welfare.  By applying for a tax exemption, your organization gives up the right to make certain forms of speech.  Want to say whatever you want?  Don’t be tax-exempt.  Want to be tax-exempt?  Leave politics out of the sermon.