Published Online:

Reagan Critics Fight New Tax policy in Court and Congress

Article Tools
  • PrintPrinter-Friendly
  • EmailEmail Article
  • ReprintReprints
  • CommentsComments

Washington--Civil-rights groups and members of Congress pushed forward last week with their own attempts to deny federal tax exemptions to private schools that discriminate on the basis of race, despite President Reagan's assertion that he will work toward the same goal.

The controversy stems from the Treasury Department's announcement on Jan. 8 that the Internal Revenue Service (irs) would no longer withhold tax-exempt status from educational organizations that refuse to adopt non-discriminatory policies.

Last Tuesday, in the wake of heavy criticism from civil-rights groups, some private-school organizations, and several members of Congress--including some Republicans--the President said he would submit to Congress legislation barring racial discrimination by tax-exempt schools. While he is opposed to racial discrimination, Mr. Reagan said, he believes it is up to Congress, not to irs officials, to make decisions on tax exemptions.

But many critics of the shift in irs policy questioned the President's motives since he waited four days to announce that he was in sympathy with their goals.

And some groups forged ahead, preferring not to wait for President Reagan's proposed legislation.

'Private Attorney General'

The National Association for the Advancement of Colored People (naacp) announced that it would seek to become a "private attorney general'' in a Supreme Court case on the same issue. The Justice Department, because of the policy shift, dropped the case, in which it opposed two schools that were denied tax exemptions because of discriminatory policies. The naacp, according to its general counsel, Thomas I. Atkins, hopes to keep the case alive by taking over the Justice Department's role.

On Wednesday, the Lawyers' Committee for Civil Rights Under Law, a private organization based in Washington, asked the U.S. District Court for the District of Columbia for an immediate injunction preventing the Treasury Department and the irs from rescinding the anti-discrimination policy that has been in effect since 1970.

And on the same day, a spokesman for Senator Gary Hart said the Colorado Democrat would prepare a bill "essentially applying the same criteria" for tax-exempt status that were contained in the now-revoked irs policies.

Those criteria include the adoption and public dissemination of a broad policy of non-discrimination. In the cases of all-white schools that were established at the same time that local public schools were undergoing desegregation, a heavier burden of proof has fallen upon the private schools to demonstrate that they do not discriminate.

"We don't know what the Administration would come forward with," said Paul M. Wattles, press secretary to Senator Hart. "We would like to see legislation that is appropriate and legitimate be put into place." Senator Hart's bill will be introduced soon after the Senate reconvenes Jan. 25, Mr. Wattles said.

Fourteen other Senators joined Mr. Hart in signing a "Dear Colleague" letter denouncing the irs policy shift, Mr. Wattles noted, indicating that such legislation might win broad support in the Senate.

The Lawyers' Committee for Civil Rights Under Law, however, contends that no legislation is needed, because the irs is still under a 1971 court order to deny tax exemptions to schools with discriminatory policies.

"The Treasury Department has no authority simply to disregard that court order and reinterpret what the statute means," said Norman J. Chachkin, deputy director of the lawyers' group.

That injunction, which the government claims is "not binding," came in the case now called Green v. Regan, filed in 1969 on behalf of black students and parents in Mississippi. It is in the same case that the lawyers' committee last week sought yet another injunction--this one to prevent the irs from carrying out the new policy.

Barring a new injunction, the irs apparently intends to follow its new policy, at least until legislation is enacted to the contrary. More than 100 schools and other educational organizations stand to regain tax exemptions, and hundreds of others that never applied in the past might now qualify.

"We're trying to act quickly to ensure that the irs does not restore exemptions to segregationist acade-mies that lost them or grant new exemptions," Mr. Chachkin said.

Mr. Chachkin also said he was surprised that the government had dropped its case against Bob Jones University and the Goldsboro (N.C.) Christian Schools, which only last fall was accepted for review by the Supreme Court.

In that case, the schools argue that their racially discriminatory policies stem from their fundamentalist Christian beliefs--and that the irs rulings on tax exemptions thus infringe on the free exercise of religion.

"It seems to me that the more logical procedure if there were any doubt [about the propriety of the irs rules] would be to return to court," Mr. Chachkin asserted. "I would think the question could have been settled by letting the Supreme Court decide the case."

Tax-exempt status is crucial to the survival of many private schools. It relieves them of any obligation to pay federal Social Security and unemployment taxes. Furthermore, private contributions to tax-exempt institutions are tax-deductible.

"It's the lifeline," said Robert L. Smith, executive director of the Council for American Private Education (cape), a Washington-based organization representing some 15,000 schools.

cape's members, which include Catholic, Lutheran, Jewish, and independent schools, enroll some 85 percent of all private-school students in the nation, Mr. Smith said, and must adhere to non-disciminatory policies.

"Private schools exist on tuition and on gifts, and very few are supported in full by tuition," Mr. Smith explained. "In getting gifts, tax-exempt status is very important."

Because many of cape's member-schools are supported by churches while others rely heavily on tuition, Mr. Smith said, it is difficult to generalize about the importance of tax-exempt gifts.

But on the average, he estimated, 10 to 15 percent of the operating budgets of member-schools come from such donations.

The major organizations of Christian schools, however, see the issue not as a financial one, but as a question of government intrusion into church operations.

"Contrary to the public perception, most Christian schools do not depend on tax-exempt contributions," said the Rev. Gerald B. Carlson, field director of the 1,000-member American Association of Christian Schools in Normal, Ill.

"We are against the idea of unelected officials making public policy, especially where it has an impact on internal church operations. The irs regulations, we think, are a violation of the separation of pow-ers." The great majority of Christian schools, like many other denominational schools, are automatically tax-exempt because they are part of a church, according to Mr. Carlson and Paul A. Kienel, executive director of the Association of Christian Schools International, a 1,700-member organization based in suburban Los Angeles.

Both men said their member-schools that are not affiliated with churches--so-called "independent Christian schools"--have met the irs's conditions for tax-exemption. But both said they, and their members, are strongly opposed to any government intervention, fearing the eventual imposition of racial quotas on religious schools.

For that reason, Mr. Kienel said, Christian schools as a group have been unfairly portrayed by critics as racially biased.

Web Only

You must be logged in to leave a comment. Login | Register
Ground Rules for Posting
We encourage lively debate, but please be respectful of others. Profanity and personal attacks are prohibited. By commenting, you are agreeing to abide by our user agreement.
All comments are public.

Back to Top Back to Top

Most Popular Stories