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Court Bars Tax Breaks for Discriminatory Schools

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Washington--The decision by the U.S. Supreme Court last week to deny federal tax exemptions to schools and colleges that practice racial discrimination was hailed by representatives for many private schools as a vindication of the schools' anti-discrimination policies.

"I hope it will bury forever the notion that racial discrimination is widespread in private education. The few private schools that have been discriminating have been giving the great majority of private schools a black eye," said Robert L. Smith, executive director of the Council for American Private Education, which represents schools that enroll 80 percent of the nation's private-school students.

Similarly, the Boston-based National Association of Independent Schools said in a statement that it was "fully in accord" with the Court's 8-to-1 decision.

The ruling issued last Tuesday against Bob Jones University and the Goldsboro Christian Schools was, however, denounced as religious discrimination by Jack Clayton, the representative here for the Chicago-based American Association of Chris-tian Schools, which represents 1,100 schools around the country.

"We are now back to a medieval doctrine of raison d'etat," Mr. Clayton said. "It makes every religious institution--church and school--subject to arbitrary and capricious definitions of public policy that have never been enacted into law."

Both the university and the schools maintained that their racially discriminatory policies were based on religious beliefs. The university has admitted black students since 1975, but it does not permit interracial dating or marriage among its students. The Goldsboro schools have not admitted black pupils since the schools began operating in 1963.

In the opinion, written by Chief Justice Warren E. Burger, the Court upheld a regulation issued in 1970 by the Internal Revenue Service (irs) that discontinued the granting of tax-exempt status to schools that practiced racial discrimination.

The strongly worded ruling, from which Associate Justice William H. Rehnquist was the sole dissenter, asserted that "there can no longer be any doubt that racial discrimination in education violates deeply and widely accepted views of elementary justice."

"It would be wholly incompatible with the concepts underlying tax exemption to grant the benefit of tax-exempt status to racially discriminatory educational entities," the Chief Justice continued.

The attorneys for the schools had argued that the irs action in 1970 was inappropriate because the Congress had not amended the irs Code to give the agency the specific authority to gauge the tax status of educational institutions by their racial policies.

The Chief Justice acknowledged the absence of specific legislative action, but he also cited "unmistakable evidence" that underlying the irs Code was "the intent that entitlement to tax exemption depends on meeting certain common-law standards of charity."

Since the regulation was issued in 1970, he wrote, 13 bills were introduced in the Congress to overturn the irs rule. "Not one of these bills has emerged from any committee, although Congress has enacted numerous other amendments" to the section of the irs Code that deals with charitable institutions, known as Section 501(c)(3).

As further evidence, he cited "an unbroken line of cases following Brown v. Board of Education," that "establishes beyond doubt this Court's view that racial discrimination in education violates a most fundamental national public policy, as well as rights of individuals."

Thus, schools that receive federal tax exemptions "must serve a public purpose and not be contrary to es-tablished public policy," the Chief Justice concluded.

He was joined in the opinion by Associate Justices William J. Brennan Jr., Thurgood Marshall, Byron R. White, Harry A. Blackmun, John Paul Stevens, and Sandra Day O'Connor.

Associate Justice Lewis F. Powell Jr. wrote a separate, "concurring'' opinion, in which he agreed that tax-exempt status should not be available to schools "that concededly are racially discriminatory." But the Associate Justice wrote that he was "unconvinced that the critical question in determining tax-exempt status is whether an individual organization provides a clear 'public benefit' as defined by the Court."

Legislative Intent

In the dissenting opinion, Associate Justice Rehnquist argued that "congressional inaction is of virtually no weight in determining legislative intent." Further, he asserted that in the absence of action by the Congress on the tax-exempt status of racially discriminatory private schools, "we are not constitutionally empowered to act for them."

Bob Jones University, located in Greenville, S.C., officially lost its tax exempt status in 1976. The Christian schools, located in Goldsboro, N.C., never received a determination of tax-exempt status, having been declared ineligible by the irs in 1972. The two institutions had brought suit against the irs separately, and decisions against both schools by the U.S. Court of Appeals for the Fourth Circuit were appealed to the Supreme Court. The suits are Bob Jones University v. U.S. and Goldsboro Christian Schools Inc. v. U.S. The case has been considered an embarrassment to the Reagan Administration. Senator Robert Dole, Republican of Kansas, earlier called it one of the Administration's "greatest political fumbles."

The Administration had originally filed a brief indicating it would defend the irs rule. But it switched positions in January 1982, asking the Court to declare the case moot because the Administration intended to revoke the 1970 regulation.

Following a request by several civil-rights organizations, the Court announced it would consider the case after all. The Court named William T. Coleman Jr., a Washington lawyer who served in the Nixon Administration, to argue the federal government's original position as a "friend of the court." William Bradford Reynolds, the assistant attorney general for civil rights, argued the Administration's new position.

The Administration's about-face drew strong criticism from many sides, leading President Reagan to ask the Congress to pass a law making it unlawful for racially discriminatory schools to receive tax exemptions. The Congress, however, took no action because its leaders said they would await the Court's decision in the Bob Jones University case.

President Reagan reacted to last week's decision with a single statement: "We will obey the law."

Attorney General William French Smith issued a statement that said, in part, that the Court's ruling made it "clear that additional legislation is not needed" and that the irs should now "proceed to deny exemptions" to schools that discriminate.

The Rev. Bob Jones 3rd, president of the university that was founded by his father in 1927, reacted to the Court's ruling in an address to the university's students last Tuesday.

"We're in a bad fix in America when eight evil old men and one vain and foolish woman can speak a verdict on American liberties," he said. The university lowered its flag to half mast after the decision was announced.

An official of the Free Congress Foundation, a Washington-based research organization that promotes politically conservative projects, called the Court's decision "nightmarish."

"I can't think of a decision that is more harmful to minority rights," said Patrick B. McGuigan, director of the foundation's judicial-reform project.

Mr. McGuigan said that although he did not share the schools' racially discriminatory religious beliefs, "they are their beliefs." He predicted that other religious groups might have "their religious activities regulated" as a result of the decision.

"In Catholic parochial schools, fundamentalist schools, and Orthodox Jewish schools, it is absolutely impossible to make the separation between the church's activities and education. Education is part of the community life built around the church," he said.

Mr. McGuigan's position--that the decision might imperil religious freedom--was also expressed by several religious groups that filed friend-of-the-court briefs supporting the principle underlying the schools' case, but opposing their discriminatory policies.

Briefs taking such a position were filed by the General Conference of the Mennonite Church, the American Baptist Churches, the United Presbyterian Church, the Church of Jesus Christ of the Latter Day Saints, the Worldwide Church of God, the National Association of Evangelicals, the Christian Legal Society, the National Jewish Commission on Law and Public Affairs, and the National Committee for Amish Religious Freedom.

Religious Schools

A footnote to Chief Justice Burger's opinion, however, emphasized that the Court was dealing "only with religious schools--not with churches or other purely religious institutions."

Representatives of civil-rights organizations, many of which also filed friend-of-the-court briefs, reacted overwhelmingly in favor of the decision.

Jack Greenberg, director of the New York-based naacp Legal Defense and Educational Fund, praised the ruling as "part of a pattern that makes it quite clear that there is a basic floor [of civil-rights law] below which this Court is not going to descend." Mr. Greenberg cited as evidence of the "floor" the Court's decision last year in favor of busing for desegregation in Washington State and its refusal earlier this year to overturn a busing order in Nashville.

Norman Chachkin, deputy director of the Washington-based Lawyers Committee for Civil Rights Under Law, said the decision will have an immediate effect on a related case, Reagan v. Wright, that is pending before the Court.

In that lawsuit, the lawyers committee is representing black parents who are seeking "standing" in federal court to sue the irs to step up its enforcement of the 1970 regulation.

Another related lawsuit, Green v. Reagan, pending in U.S. District Court in Washington, D.C., seeks stricter enforcement of the irs rule in Mississippi.

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