Reagan Submits Legislation On Schools’ Tax Exemption
President Reagan recently presented a bill to Congress that aims to withhold federal tax exemptions from private schools that engage in racial discrimination. However, the bill also takes into account the special needs of private religious schools. In the meantime, the government maintains that there is no official prohibition against granting tax exemptions to such schools. However, the Treasury Department has announced that it will not process any new applications for tax-exempt status for schools until Congress addresses the issue.
The Lawyers’ Committee for Civil Rights Under Law has requested the U.S. District Court for the District of Columbia to preserve and enforce the government’s policy as it stood before January 8th. They argue that any change in direction would violate a federal injunction from 1971 that prevents the extension of tax privileges to segregated schools. The lawyers’ group asserts that existing laws already prohibit such tax exemptions, making new legislation unnecessary.
Similarly, the U.S. Commission on Civil Rights has urged Congress to reject the bill. They claim that Title VI of the Civil Rights Act of 1964 already prohibits federal benefits to discriminatory institutions. A member of the commission, Stephen Horn, stated that their position can be summarized as "The law is on the books. Enforce it." However, unless there is a new court order, two institutions, Goldsboro Christian Schools and Bob Jones University, will continue to receive tax exemptions until legislation is passed, despite being labeled racially biased. The government dropped their case against these institutions on January 8th when it revoked the Internal Revenue Service (IRS) rules that prevented exemptions for discriminatory schools.
President Reagan explained that the reaction to the revocation of the IRS rules stemmed from a misunderstanding, as the matter was seen as a change in policy rather than a procedural matter. He took responsibility for the confusion that followed and admitted that the Administration’s handling of the issue led to misinterpretations. Despite the criticism, the President intended to restore the anti-discrimination policy through legislation, and had been discussing it with Senators prior to the controversy.
The President’s bill would grant the Secretary of the Treasury and the IRS the authority to deny tax-exempt status to private, non-profit educational organizations with racially discriminatory policies. The legislation would be retroactive to July 9, 1970, when the IRS rules were implemented. As a result, if Bob Jones University and the Goldsboro schools receive temporary exemptions, they may have to repay any benefits they received under the exemption if the new legislation deems them ineligible once again.
"According to Paul Wattles, the press secretary for the Senator, it seems that there are no significant loopholes. However, Mr. Wattles stated that Senator Hart plans on presenting a separate bill that shares similar objectives."
