A very interesting comment authored jointly by Rick Garnett, John Inazu, and Michael McConnell on the recently introduced First Amendment Defense Act. A bit:
Today, tens of thousands of religious organizations, and tens of millions of Americans, continue to believe and teach that the proper understanding of marriage is a union of one man and one woman. But they do far more than believe and teach this and other views.
They also give food, clothing, shelter, counsel, and comfort to millions of Americans in need. They offer some of the most important and desperately needed health, educational, and social services in the country. And they provide billions of dollars and thousands of full-time workers for international relief aid that serves vulnerable migrants, refugees, and persecuted minorities. The work of religious organizations has long been and continues to be central both to religious believers’ lives and to the welfare of others. Our communities—and, indeed, communities around the globe—would be much worse off without these organizations and their faith-informed good works.
Despite the crucial role that religious organizations and individuals have long played in our country, some voices now suggest that they and their work are somehow tainted because of their beliefs about marriage and sexuality. Some argue that the time has come to push religious believers out of the public square and confine them to the quiet, private realm of personal prayer and worship. This despite the Supreme Court’s recent decision in Obergefell v. Hodges, which not only required states to legally recognize same-sex marriages but also said, “the First Amendment ensures that religious organizations and persons are given proper protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths.”
Nonetheless, because of their traditional views on human sexuality, religious organizations have already been threatened with heavy-handed government action….
Some members of Congress have now introduced the First Amendment Defense Act (FADA) in an effort to ensure that overheated rhetoric and political opportunism do not endanger the important work of faith-based organizations. The core of FADA would require the federal government to honor its longstanding commitments to treat all such organizations with an even hand. It would prevent federal officials from attempting to strip tax-exempt status, from denying equal access to federal facilities and entitlements, or from taking adverse actions related to licensing or accreditation….
We understand that new versions will address many or all of these issues. We think the best approach is to tailor FADA to the core area of concern: religious nonprofits. That focus would serve the cause of religious freedom by making it more likely that this important legislation can move forward.
One thought that has occurred to me on the issue of “tax exemption” of nonprofit institutions is that the entire discussion seems askew. It generally begins from the premise that the government can and should be able to tax anyone and anything that it pleases. The tax base is limitless. Amenability to taxation, however, ought not to be the default posture, as if the government simply gets to decide at its pleasure and election whom and what it wishes to tax. Income taxation only follows from the fact of income generation, and though nonprofits generate income they do not distribute it to individuals for private use but spend it in ways that promote public functions and purposes. Nonprofit actors are not appropriate objects of this kind of taxation at all. Consider, for example, the way in which the Connecticut Supreme Court in an 1899 decision discussed Yale University’s tax exempt status (not an income tax decision, of course):
The non-taxation of public buildings is not the exception but the rule. The corporations, whether municipal or private, which own and are by law charged with the maintenance of such untaxed buildings, are not the recipients of special privileges, in any sense obnoxious to the law. The seats of government, State or municipal, highways, parks, churches, public school-houses, colleges, have never been within the range of taxation; they cannot be exceptions from a rule in which they were never included.
Yale University v. Town of New Haven, 42 A. 87, 91 (1899). These institutions are, as the authors of the piece put it, actors within “civil society” that should in general not be touched by the government’s taxing power. Moreover, a government decision not to tax is emphatically not the same as a government decision to grant money or subsidize. We use the language of “exemption” when we speak of the taxable status of nonprofits, but it would be better instead to think of their nontaxable status as marking a boundary of the government’s power to tax.
[Update: I’ve amended some things in the post for clarity.]