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Op-Ed Contributor

Leave the Johnson Amendment Alone

Credit...William Widmer for The New York Times

As the House and the Senate seek agreement on tax reform, they will have to decide the fate of the so-called Johnson amendment. This provision of the Internal Revenue Code prohibits tax-exempt charities from electioneering — that is, from becoming involved in any way in a candidate’s campaign for elected office. The tax reform bill passed by the House last month loosened this prohibition to the point where it would no longer prohibit much. The Senate’s tax reform bill made no change to current law.

Evangelical churches have long objected to the strictures of the Johnson amendment. From the beginning of his candidacy, President Trump promised them that he would repeal it. In fact, as originally proposed, the House tax reform bill would have altered the Johnson amendment only for houses of worship. The House, however, quickly revised its proposal. As finally passed by the House, the provision would permit any tax-exempt charity to support or oppose a candidate as long as “the preparation and presentation of such content” occurs “in the ordinary course of the organization’s regular and customary activities” and does not result in “more than de minimis incremental expenses.”

The breadth of the House proposal is far from clear. When are activities “regular and customary”? When is an expense “de minimis” (meaning insignificant) or “incremental”? If this uncertain standard becomes law, the I.R.S. will need to give charities and potential donors guidance about the meaning of those terms. Whatever rules the I.R.S. announces, they are sure to be fraught with complication.

But no matter what the I.R.S. says, the amendment in the House bill would open the floodgates to politicking by charities. Charities today make enormous use of social media. A charity’s webpage often serves as its most important public gateway. Nothing in the House revision of the Johnson amendment forbids speeches, sermons, policy discussions or other activities that include electioneering from being posted on that webpage, streamed or tweeted. Communicating this way would cost the charity next to nothing and would probably qualify as a “de minimis” expense. In our digital era, the communicative impact of an exception for de minimis financial outlays is far more than de minimis.

The sponsors of the proposed change to the Johnson amendment may have intended to permit only brief, occasional instances of electioneering. We know that established charities, particularly churches, engage in such activity now. But the House proposal, if enacted as written, will do far more than bless current practice. Given that the I.R.S. is already suffering from too few enforcement resources, the I.R.S. may well hesitate to take action against possible violations of this de minimis limit. As a practical matter, a de minimis exception will come close to repealing the Johnson amendment completely.

Other tax-exempt organizations (such as section 501(c)(4) welfare organizations) can already engage in electioneering to a considerable extent. The Johnson amendment does not apply to them. But it is precisely because of the Johnson amendment’s prohibition on electioneering that charities have been a sanctuary in our increasingly partisan world. Over time, permitting charities to engage directly in electoral politics will reduce the respect they have long been afforded. In the long run, it will harm the sector. That is why so many charities, including many religious organizations, have opposed any change to the Johnson amendment.

Contributions to charities are deductible; contributions to PACs and section 501(c)(4) social welfare organizations are not. Because charities can have enormous influence on political campaigns with very little expense, many who wish to intervene in political campaigns will shift their contribution from PACs and social welfare organizations to charities. Currently, the House proposal operates for five years, from Jan. 1, 2019, to Dec. 31, 2023. The Joint Committee on Taxation estimates the revenue loss for this five-year period at $2.1 billion. This number probably underestimates the actual cost of the House’s proposed change to the Johnson amendment. Charities that make a decision to electioneer will attract large donations from donors who would like to obtain deductions and influence elections in one fell swoop.

The House proposal also encourages the establishment of new entities to take advantage of the revised rules. These newly created organizations would establish their own norms as to what is “regular and customary.” In short order, organizations would be formed precisely to take advantage of this new electioneering rule.

Under our current campaign finance regime, only dollars that have been subject to income tax can be used for electioneering. A de minimis exception for electioneering by charities will undermine this basic principle. It will harm both the law regulating charities and the law regulating campaign finance. Our country will be far poorer for such changes.

The Senate version of tax reform does not alter the Johnson amendment. Its position should prevail. During reconciliation, the House amendment to the Johnson amendment should be dropped.

Ellen P. Aprill is a professor of tax law at Loyola Law School.

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A version of this article appears in print on  , Section A, Page 27 of the New York edition with the headline: Leave the Johnson Amendment Alone. Order Reprints | Today’s Paper | Subscribe

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