Federal law provides that ‘‘[c]orporations organized and operated exclusive for religious, charitable, or educational purposes’’ are entitled to tax-exempt status. But is a private school that discriminates on the basis of race entitled to federal tax-exempt status? In Bob Jones University v. United States, the Supreme Court concluded that racially discriminatory private school cannot receive federal tax exemptions, even if its discriminatory practices are grounded in religious belief.
Bob Jones University calls itself ‘‘the world’s most unusual university.’’ Although unaffiliated with any established church, the university is dedicated to the teaching and propagation of fundamentalist religious beliefs. In pursuit of these goals, the university dictates strict rules of conduct for its students. To enforce one such rule forbidding interracial dating and marriage, the university denies admission to applicants engaged in or known to advocate interracial dating and marriage.
The Bob Jones University controversy began in 1970, when the Internal Revenue Service (IRS) concluded that it would no longer grant tax-exempt status to schools that violate governmental policy outlawing federal funding of discriminatory institutions. After paying a portion of the federal taxes due, the university filed suit for a refund, contending that it was statutorily and constitutionally entitled to reinstatement of its tax exemption. In 1981, the Supreme Court agreed to hear Bob Jones University and a related case raising similar issues, Goldsboro Christian Schools, Inc. v. United States. At that time, Bob Jones University was perceived as a religious liberty lawsuit. Specifically, little attention was paid to whether or not the IRS could withhold tax breaks from segregationist academies and other racist schools; the focus of the litigation, instead, was whether First Amendment religious liberty protections would extend to a school whose discriminatory practices were tied to religious conviction.
In January 1982, however, the Reagan administration sought to moot Bob Jones University and Goldsboro. Noting that Congress never formally specified that tax-exempt organizations must conform to ‘‘public policy,’’ the administration claimed that it lacked authority to withhold tax exemptions from racist schools. The administration’s policy shift prompted a political backlash and the administration withdrew its request to have the Supreme Court declare the case moot. In May 1983, the Court, by a vote of eight to one, denied tax exemptions to the two schools. In an opinion written by Chief Justice Warren Burger, the Court held that a tax-exempt institution must confer some ‘‘public benefit’’ and that its purpose must not be at odds with the ‘‘common community conscience.’’ The Court further held that the IRS has broad authority to interpret the code and to issue rulings based on its interpretation.
The Court also considered the religious liberty claims of Bob Jones University and Goldsboro Christian Schools. Noting that the ‘‘[g]overnment has a fundamental overriding interest in eradicating racial discrimination in education,’’ the Court concluded that this governmental interest ‘‘substantially outweighs whatever burden denial of tax benefits’’ places on the exercise of religious belief. By holding that equality of treatment on the basis of race is the Constitution’s most essential protection, and that the government’s broad interest in racial discrimination in education was at issue, the Court had little difficulty in disposing of the religious liberty claims of Bob Jones University and Goldsboro Christian Schools.
In fact, the Court devoted less than three pages of its thirty-page opinion to the religious liberty issue. Furthermore, in ruling against the two schools, the Court made no effort to distinguish Bob Jones University’s prohibition of interracial dating (among a student body that included both minorities and nonminorities) from Goldsboro Christian School’s refusal to admit minority students. Apparently, the Reagan policy shift had transformed Bob Jones from a religious liberty lawsuit into a socially significant racial discrimination lawsuit. Against this backdrop, the Court may have thought it ill advised to distinguish the social policies of one school from the admissions policies of another, preferring, instead, to speak about the evils of racial discrimination.
The Court should not be faulted for its failure to give substantial attention to religious liberty concerns. Between nondiscrimination in education and religiously inspired discrimination, the Court’s endorsement of nondiscriminatory objectives is hardly surprising. Indeed, the Court broke little, if any, doctrinal ground in Bob Jones University. Starting with its 1982 decision in United States v. Lee, the Court has refused to give special exceptions to religious organizations from generally applicable eligibility schemes. Bob Jones University’s significance, in other words, is not tied to the case’s precedential impact but to its explosive political setting.
References and Further Reading
Case and Statutes Cited