Tax bill could make ‘dark money’ political contributions tax deductible

By Jon Sarlin

This piece originally appeared on CNN

For the first time in American politics, anonymous “dark money” political donations could become tax-deductible. That’s if a provision currently being debated between House and Senate negotiators makes it into the final tax bill.
The issue at hand started with the “Johnson Amendment,” named after then-Sen. Lyndon Johnson’s 1954 measure that prohibits nonprofit groups who maintain tax-exempt status, including churches and charities, from directly participating in politics.
But efforts to repeal the Johnson Amendment have resulted in language that would ease political speech rules for all nonprofits. The results, critics say, could effectively let people deduct de-facto political donations and further hide those donations and spending from the public.
“This is taxpayer-subsidized “Citizens United,'” said Ian Vandewalker of the Brennan Center for Justice, referring to the 2010 landmark Supreme Court case that loosened campaign finance rules.
The House tax bill passed in November included a repeal of the Johnson Amendment, while the Senate did not. Currently, lawmakers are at work reconciling the two bills.

Opponents of the Johnson Amendment, including President Donald Trump and top evangelical leaders, say the law stifles religious freedom.

Speaking at the National Prayer Breakfast in February, Trump declared that he “will get rid of, and totally destroy, the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution.”

Proponents of the Johnson Amendment describe it as an important bulwark that shields nonprofits and houses of worship from partisan politics.

According to Brendan Fischer of the nonpartisan Campaign Legal Center, the Johnson Amendment “protects charities and churches from some of the pressures associated with partisan political activity.”

“Churches and religious organizations are currently free to engage in whatever kind of speech they want,” said Vandewalker. “What this is about is about spending a large amount of money.”

But repealing the amendment would have far-reaching consequences beyond the pew.

The original bill introduced in the House this year limited the Johnson Amendment repeal to “churches,” but the language was changed in the House Ways and Means Committee to broaden the scope of the repeal to include all 501(c)(3) nonprofits, meaning every nonprofit would be able to endorse and support candidates and causes.

“The Johnson Amendment today infringes on the First Amendment rights of nonprofit employees — whether they work at a charity, church or community organization,” a spokeswoman for Ways and Means Chairman Kevin Brady, R-Texas, said in a statement. “This bill simply protects the Constitutional rights of those employees so they can speak freely on matters affecting their communities, including making candidate-related statements.”

The change would also cost billions of dollars. The non-partisan Joint Committee on Taxation estimates the rule change would cost the US treasury around $2.1 billion over the next decade in lost revenue, assuming billions of dollars of political donations would be funneled through newly tax-deductible nonprofits.

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