By: David Herzig
As the world braces for the upcoming Executive Order from President Trump,
I wanted to take a minute and describe the Johnson Amendment. Later today, after the actual Executive Order is made public, Ben Leff will be writing up a more through post.
A couple of months ago President Donald Trump told the audience at the National Prayer Breakfast that he would “get rid of and totally destroy” the Johnson Amendment. Which raises the question: what is the Johnson Amendment. Because he brought it up at the National Prayer Breakfast, it also leads to the question of how does affects churches.
In 1954, without explanation, Lyndon Johnson proposed a small amendment to the tax law governing tax-exempt organizations: forbid them from endorsing or opposing candidates for office. One of the few consistent talking points during president-elect Donald Trump’s campaign was that this so-called “Johnson Amendment” should be repealed; since comprehensive tax reform is part of Trump’s plan for his first 100 days in office, the repeal may happen immediately.
Although the Johnson Amendment applies to all tax-exempt organizations, it has become something of a bête noire for churches. So it should come as no surprise that, in courting the evangelical vote, its repeal became a campaign talking point and is now an action plan for the President.
While the idea of repealing the Johnson Amendment is popular among certain sets of voters, others fear that its repeal will effectively turn churches into a giant super PACs. After all, donations to churches and other tax-exempt organizations are deductible to the donor. Expressly political donations (including to PACs) are not. Supporters of the Johnson Amendment fear that, without it as a backstop, wealthy would-be political donors will instead capture tax-exempt organizations and flood them with (deductible) donations, with the condition that they support the donor’s preferred candidate for office.
But practicality is not the only backstop. Even without the Johnson Amendment, the tax law severely constrains churches’ ability to engage in politics. Exempt organizations must primarily do things that further their exempt purpose, and politics do not qualify as an exempt purpose. As a result, if a church’s politicking (combined with all of its other non-core activities) make up more than an “insubstantial” part of its activities, the church no longer qualifies as exempt. Though the tax law does not define “insubstantial,” courts have found this to be a true limit.