Again the Supreme Court has done something it should not have done, and has done it because Congress has not done something it should have done. When liberals are done applauding Chief Justice Warren Burger's opinion for the majority in the Bob Jones University case, they should read it, and should ponder the formulation on which it turns. The formulation is factually false and philosophically illiberal.
Bob Jones University forbids the practice or advocacy of interracial marriage or dating. All nine justices believe that elimination of such discrimination is a fundamental government interest, and that Congress could choose to deny tax-exempt status to schools that discriminate. Burger argues that Congress has chosen, implicitly, by inaction. Justice William Rehnquist, dissenting alone, disagreed.
In 1970, parents of black pupils in Mississippi public schools sued the Internal Revenue Service to stop it from giving tax-exempt status to private schools that discriminate. IRS said it did not have the power to deny tax exemption to schools that met the requirements of the law. The law simply says that tax exemption shall be awarded to institutions that are organized for any of eight purposes (including education), that are nonprofit and are not involved in lobbying or political campaigns.
But during the litigation, the IRS suddenly reversed itself and said a tax-exempt school must be a "charity" within common-law concepts, and the IRS said that means the institution must "serve a public purpose and not be contrary to public policy." At various points in his opinion Burger says the common-law definition of a charity means the institution must not have practices "contrary to established public policy," must not be "contrary to settled public policy," must not violate "a fundamental public policy," and must be "in harmony with the public interest." Burger says Bob Jones University is disqualified from exemption because its practices are "affirmatively at odds with" a fundamental public policy.
But is it reasonable to suppose that Congress ever intended the IRS to exercise the untrammeled discretion involved in improvising judgments about which institutions are and which are not in harmony with "settled" or "established" or "fundamental" (those are not synonyms) policy? Rehnquist thinks not.
Congress, he says, has been remarkably explicit about the criteria for tax-exempt status, adding new criteria from time to time. And he reminds the court that it has traditionally been reluctant to infer Congress' ratification of a policy from the mere fact of Congress' acquiescence in the policy. Now the court says Congress adopted the IRS position by not reversing it.
Burger says this is an unusually strong case of legislative acquiescence, in part because in 1976 Congress amended the law to require denial of tax-exempt status to social clubs that discriminate racially. Rehnquist says, reasonably, that Burger's example refutes Burger's position. The example shows that when Congress wants a policy change, it makes its intention clear in action.
Paradoxically, the severest criticism of the ruling is in Justice Lewis Powell's concurring opinion, a notably uneasy concurrence. He notes that in 1981 more than 106,000 organizations received tax-exempt status, organizations as different as the Moral Majority and Friends of the Earth. How many of these could prove that they are (in Burger's words) not acting contrary to established or settled or fundamental public policy, or are in harmony with the public interest? How many liberals now applauding Burger's opinion really want a bureaucracy enforcing the "element of conformity" that Powell detects in Burger's opinion?
As Powell says, Burger's analysis suggests that the primary function of tax-exempt organizations is to carry out government-approved aims and strengthen government orthodoxy. But Powell believes that another, better justification is that tax exemptions nurture creative disharmony by leavening America's pluralism with groups that challenge settled, established policy. My libertarian impulses are few and weak, so Burger's analysis does not scandalize me. But why are liberals so tickled?
Powell concludes by saying that the legislature, not the IRS, should develop national policy regarding tax exemption: "There no longer is any justification for Congress to hesitate--as it apparently has--in articulating and codifying its desired policy as to tax exemptions for discriminatory organizations." But the ruling with which Powell concurs means there is no reason for Congress to act. Policy is supposedly packed into the concept of a "charitable" organization, and Congress supposedly has affirmed, by acquiescence, the IRS's power to unpack the policy.
Denial of tax exemptions for organizations that discriminate racially is proper policy. But this sort of jurisprudence contributes to the decay of representative institutions.