The Story of <I>Bob Jones University V. United States</I>: Race, Religion, and Congress' Extraordinary Acquiesce
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Columbia Law School Scholarship Archive Faculty Scholarship Faculty Publications 2010 The Story of Bob Jones University v. United States: Race, Religion, and Congress' Extraordinary Acquiescence Olatunde C.A. Johnson Columbia Law School, [email protected] Follow this and additional works at: https://scholarship.law.columbia.edu/faculty_scholarship Part of the Civil Rights and Discrimination Commons, Law and Race Commons, and the Supreme Court of the United States Commons Recommended Citation Olatunde C. Johnson, The Story of Bob Jones University v. United States: Race, Religion, and Congress' Extraordinary Acquiescence, STATUTORY INTERPRETATION STORIES, WILLIAM ESKRIDGE, PHILIP P. FRICKEY & ELIZABETH GARRETT, EDS., FOUNDATION PRESS, 2010; COLUMBIA LAW SCHOOL PUBLIC LAW & LEGAL THEORY WORKING PAPER NO. 10-229 (2010). Available at: https://scholarship.law.columbia.edu/faculty_scholarship/2523 This Working Paper is brought to you for free and open access by the Faculty Publications at Scholarship Archive. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarship Archive. For more information, please contact [email protected]. Columbia Law School Public Law & Legal Theory Working Paper Group Paper Number 10-229 THE STORY OF BOB JONES UNIVERSITY V. UNITED STATES: RACE, RELIGION, AND CONGRESS’ EXTRAORDINARY ACQUIESCENCE BY: PROFESSOR OLATI JOHNSON COLUMBIA LAW SCHOOL Electronic copy available at: http://ssrn.com/abstract=1552173 On May 25, 1983, the Supreme Court ruled 8-1 that the United States Internal Revenue Service (IRS) had authority to deny tax-exempt status to Bob Jones University, Goldsboro Christian School, and other private and religious schools with racially discriminatory educational policies. The Court relied on the statute’s broad purpose and placed significant weight on Congress’ failure to enact legislation to overturn the IRS policy. A complete account of the legislative history, provided here, both supports and undercuts the Court’s opinion. More importantly, this story provides an account of the dynamic interaction among a Supreme Court critical of racial integration, a Congress divided on this issue, and a presidency at war with itself. In the end, the story suggests that Bob Jones may have a limited role in shaping interpretive methodology, but that the case reveals how all three branches of government (as well as the public) interact to shape a statute’s meaning. The Story of Bob Jones University v. United States: Race, Religion, and Congress’ Extraordinary Acquiescence Olati Johnson “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.” These were the words of Bob Jones III on May 25, 1983, the day after the Supreme Court ruled 8-1 that the United States Internal Revenue Service (IRS) had authority to deny tax-exempt status to Bob Jones University and Goldsboro Christian School because of their racially discriminatory admissions policies. In the preceding two years, the Bob Jones case had been repeatedly featured in newspaper reports, nightly news segments, and heated public debates. Congress and the executive branch had weighed in on the case and, in the preceding decade, their actions and inactions had helped shape the larger debate surrounding tax exemptions for private schools. In announcing its decision, the Supreme Court would finally confront the question. The civil rights community and others would celebrate the decision but, for many religious groups, the Court would replace the IRS and Congress as the new villain, blamed for infringing the role of Congress and for making policy rather than interpreting law. Like Bob Jones III, observers often depict the case as a clash of two competing rights: racial equality versus religious free exercise. Yet, if these rights find expression in the case, it is through statutory interpretation. The decision is occupied far less with constitutional doctrine than with determining the plain meaning and purpose behind the tax-exemption statute, and the proper scope of the IRS’ power. Those who have studied the Court’s statutory analysis are often critical of its failure to adhere to the statutory text and its reliance on congressional inaction. But understanding the historical context—how the IRS, the Congress, the White House, and the Associate Professor of Law, Columbia Law School. Many thanks to Aslihan Bulut of the Columbia Law Library, Julius Chen, and Juan Carlos Ibarra for their wonderful research assistance. Electronic copy available at: http://ssrn.com/abstract=1552173 THE STORY OF BOB JONES 2 courts became embroiled in questions involving racial discrimination and private schools— provides, if not a complete defense, crucial context for understanding the Court’s decision. SEGREGATED PRIVATE RELIGIOUS EDUCATION AND THE TAX CODE The controversy in Bob Jones had its roots in efforts by civil rights groups to curb the growth of racially discriminatory private schools. In 1970, in a reversal of policy, the IRS announced that private schools practicing racial discrimination in admissions and other school programs would no longer receive tax exemptions.1 Just three years earlier, the IRS had declared that it lacked legal basis for denying charitable qualification to segregated private schools unless they received state aid.2 The statute that the IRS would argue permitted this new interpretation, section 501(c)(3) of the Internal Revenue Code, was not new, long predating the controversy over the tax-exempt status of racially discriminatory private schools. To understand how the IRS came to its decision requires understanding the origins of the charitable exemption, and the dramatic legal and social changes of the 1950s and 1960s that would make the charitable exemption central to debates over racial integration and religious autonomy. THE CHARITABLE TAX EXEMPTION The notion that charitable corporations should be exempt from tax is older than the federal income tax itself. Many American colonial governments exempted churches from tax by either constitution or custom, and by the nineteenth century many states did so by statute.3 State governments also exempted educational organizations from taxes as early as the 1700s.4 Tax exemptions for organizations serving the poor and needy date from the nineteenth century. By 1894, when Congress enacted its first corporate income tax, most states granted tax exemptions in favor of religious and educational institutions, as well as institutions serving the poor.5 Following longstanding state practice, Congress exempted from the income tax “corporations, companies and associations organized and conducted solely for charitable, religious or educational purposes.”6 In offering an amendment excluding such corporations from taxation, Congressman Henry Tucker (D-Va.) stated only that the provision was intended to ensure that “educational and charitable institutions not suffer under the bill.”7 In 1895, the Supreme Court issued an opinion that strongly suggested that Congress lacked power to enact a general federal corporate income tax unless it was apportioned among 1 See IRS News Releases (July 10, 1970), No. 1052 (July 19, 1970), 7 CCH 1980 Stan. Fed. Tax. Rep. ¶¶ 6790, 6814. 2 See Internal Revenue Service, General Counsel Memorandum, In Re Charitable Qualification of Segregated Schools (Aug. 1, 1967). 3 See Chauncey Belknap, The Federal Income Tax Exemption of Charitable Organizations: Its History and Underlying Policy, in Research Papers Sponsored by the Commission on Private Philanthropy and Public Needs 2027-28 (1977), available at http://www.eric.ed.gov/ (last visited DATE). ERICDocs/data/ericdocs2sql/content_storage_01/0000019b/80/31/88/62.pdf. 4 See, e.g., Province Laws 1706-07, C.6 § 2. 5 See Belknap, supra note 3, at 2025, 2030. 6 See Act of Aug. 15, 1894, ch. 349, 28 Stat. 553 (taxing “all corporations organized for profit”); Belknap, supra note 3, at 2025. 7 Belknap, supra note 3, at 2031. Electronic copy available at: http://ssrn.com/abstract=1552173 3 OLATI JOHNSON the states.8 To comply with that decision, Congress in 1909 imposed a more limited, special excise tax on for-profit organizations, again exempting “religious, charitable [and] educational corporations.” The exemption was limited to nonprofit corporations.9 After the Sixteenth Amendment to the Constitution in 1913 gave Congress the power to levy an income tax without apportionment among the states, Congress readopted and expanded the exemptive language of the 1909 statute, adding “scientific” to the list of exempt organizations.10 In 1917, Congress allowed individuals to claim tax deductions for charitable contributions.11 In 1919, Congress added organizations addressing “cruelty to animals or children.”12 And, in 1921, Congress expanded the definition of corporations to include “any community chest fund or foundation.”13 That same year, Congress included “literary” in the list of exempt nonprofit corporations. By the time Bob Jones arrived at the Supreme Court, section 501(c)(3) exempted from tax “[c]orporations, and any community chest fund or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition … or for the prevention of cruelty to children or animals.” Section 170(a) of the tax code provided deductions for “charitable contributions,” defined