September 29, 2014

Cutting Non-Defense Discretionary Spending Just Isn’t Enough

Cutting discretionary spending alone is not going to solve our fiscal woes. Entitlement reform must happen if we’re to maintain our economic strength.

That, or raise taxes. A lot.

When the LDS Church shows up for a press conference, does it jeopardize tax exempt status?

I’m expecting an Utah paper editorial separation of church and state any day now. I’d bet dollars for donuts that it’ll be in the Salt Lake Tribune, too. The Deseret News just doesn’t roll that way.

Yesterday, the LDS Church openly supported Governor Herbert’s signing of HB 116 by sending Presiding Bishop H. David Burton to the ceremony. While many detractors will argue that the Church regularly engages in political activity, citing the Proposition 8 battle in California, it is actually quite rare for the LDS Church to openly engage in politics. Typically, the LDS Church prefers to work in the background, if at all, when it feels the need to support or oppose legislation. (I do not believe that the Church has supported, in recent memory or indeed the last century, any candidates for public office).

When it does engage, actively or otherwise, it is usually because the cause aligns with what LDS Church leadership believe is in the interests of the Church membership. In California and Proposition 8, it was defense of the institution of traditional marriage. In Utah and HB116, it was the family.

Proponents of the bill were grateful for the LDS Church’s support. Sen. Stuart Reid, R-Ogden, told the Tribune that

There is no question that the Utah Compact, with the church’s endorsement, made a significant difference to me and others in the Legislature who helped craft immigration legislation. It provided the inspiration for our efforts to negotiate and compromise, enabling us to create principle-based legislation the majority of the Legislature eventually supported.

Paul Mero, Director of the Sutherland Institute, speculated that if Utah had been in legislative session right after the Arizona law passed last year, we would have seen an Arizona style enforcement law passed here.

But this is not about immigration. This is about the LDS Church’s involvement in the issue. Almost immediately after the press conference featuring Bishop Burton, questions began to arise, on Twitter and Facebook: did the LDS Church cross the line? Can it engage without forfeiting its tax exempt status?

http://twitter.com/curtbentley/status/48106635754881024

It’s an issue that comes up every few years, at least here in Utah. Uniquely in this country, Utah is dominated by members of the LDS faith. No other state is so religiously homogeneous and few faiths, with perhaps the exception of Catholicism, place such a value on following the guidance of church leadership. They believe that they are lead by a prophet and apostles that are, like the ancient Christian church, called directly by God and are in communication with Him. With that kind of faith, every action taken by LDS Church officialdom is given that much more credence than might otherwise be granted. As is often said in Sunday School–usually about gospel doctrine, not religions–“when the Prophet speaks, the discussion is over.”

The Salt Lake City LDS Temple in the heart of downtown Salt Lake, with the state capitol up the hill behind it.

So what happens when a prophet speaks about politics? Although it was only Bishop Burton at the signing, and not a declaration from the LDS Church’s current prophet and president, Thomas S. Monson, it was a clear signal about where the LDS Church stands on immigration, and it will change the political discourse in the state, if it has not already.

Legally, the LDS Church is not permitted to support of a candidates for public office under any circumstances. The LDS Church is a tax exempt organization under Section 501(c)(3) of the tax code. The IRS website states that such organizations cannot participate in support of a candidate for public office without risking tax exempt status.

The law, however,  is more lenient with regards to lobbying, which in this case would be what the LDS Church did for HB116. Again, the IRS website on lobbying for 501(c)(3) organizations:

In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying).  A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.

At what point does “some lobbying” become “too much lobbying” and risk loss of tax-exempt status? What is a “substantial part” of its activities? The IRS explains that the “substantial part” test looks at

Whether an organization’s attempts to influence legislation, i.e., lobbying, constitute a substantial part of its overall activities is determined on the basis of all the pertinent facts and circumstances in each case. The IRS considers a variety of factors, including the time devoted (by both compensated and volunteer workers) and the expenditures devoted by the organization to the activity, when determining whether the lobbying activity is substantial.

So were the LDS Church’s efforts a “substantial part of its overall activities” or not?

Previous to Bishop Burton’s appearance at the signing, the LDS Church’s support has been minimal. The LDS Church did support the Utah Compact, the guiding principles upon which the bill was written, but actually avoid public appearance or direct support when it was announced. There are allegations that Bill Evans and John Taylor spent a significant amount of time at the Capitol during the last ten days of the session; however, the presence of two lobbyists looking out for the LDS Church’s interest is hardly a substantial part of the LDS Church’s efforts. As Curt Bentley noted on Twitter

http://twitter.com/curtbentley/status/48112712072429568

With tens of thousands of missionaries world-wide, millions of members, a laity priesthood, farms, dairies, canneries, and charities, the work of two lobbyists is hardly substantial.

So, in the present case, the allegations against the Church retaining its tax exempt status will probably fail. When a church provides guidance to its members, whether lead by a prophet or by a pope, it may indeed present some internal conflict for those who do not agree with it but who ascribe to its faith. However, church’s aren’t founded to make people feel good about themselves–their purpose is to help them become better people. If that means they have to be more compassionate about their fellowmen–including those who were not born here or do not have a legal status here–then churches should, and ought, to do that.

On the other hand, whether the law will survive federal constitutional review is an entirely different question. On that, Democratic state Senator Ross Romero may have the right stance.