It's time the US Government stopped giving white supremacist groups tax exemptions

A number of white supremacist groups – including the New Century Foundation, which hosts an annual conference that has included neo-Nazis, white supremacists, Ku Klux Klan members, Holocaust deniers and eugenicists – are exempt from taxation

Donald Trump failed to condemn white supremacists in his initial response to the violence in Charlottesville (Chet Strange/Stringer)

The “Unite the Right” rally in Charlottesville shocked many Americans with its unashamed and open embrace of white supremacist and Nazi ideology. It set off a passionate national discussion on how to best deal with racism and racist groups. There is an unconventional starting point: revoking the tax exemption of white supremacist groups.

We suspect that many Americans would also be shocked to learn that a number of white supremacist groups – including the New Century Foundation, which hosts an annual conference that has included neo-Nazis, white supremacists, Ku Klux Klan members, Holocaust deniers and eugenicists – are exempt from taxation. (The National Policy Institute, directed by Richard Spencer, was another, until it lost its tax-exempt status this year after failing to file federal tax returns.) A recent Associated Press report said that over the past decade, four prominent white nationalist groups alone received over $7.8m in donations.

Like museums, churches and schools, these groups do not have to pay taxes on a majority of their revenue. Donors to these groups can deduct their gifts, and real estate that the groups own is generally exempt from property taxes. In addition, in the eyes of the organisation and the public, being tax-exempt confers a certain legitimacy.

The IRS, the agency in charge of enforcing these rules, must decide whether groups qualify for tax exemptions. It makes that decision impartially, meaning that organisations that, say, promote racist ideology are generally eligible for non-profit status as long as they are organised for a qualifying purpose and otherwise meet the criteria for exemption. For many white supremacist groups, that claim is on educational grounds (established by IRS criteria). After all, many on the far right, like Spencer and the operators of organisations like VDare, declare that they do not hate others but rather promote whiteness.

But some viewpoints are fundamentally untethered from American values and should no longer receive any state support or endorsement. We are not arguing that such despicable views be excluded from the public sphere; free speech is too important a value to dismiss just because some people’s speech is repugnant. But under current law, tax exemption represents something more than merely permitting free speech.

In 1983, the Supreme Court declared an extra-statutory rule for tax exemption – the “fundamental public policy” doctrine. In Bob Jones University v. United States, the court held that the IRS could constitutionally revoke the tax exemption of a religiously affiliated university because its racist policy violated a “fundamental public policy”.

The court did not explain how to determine when a societal value became a fundamental public policy. But it pointed out that the courts, the executive branch and the legislative branch had all been working to eliminate school desegregation; that concerted effort indicated that non-discrimination in schools was a fundamental public policy.

Despite the rhetoric of various white supremacist and white nationalist groups, an important bipartisan consensus emerged out of the chaos of the Charlottesville rally: advocacy of white supremacy and hatred by the KKK, neo-Nazis and the far right are not acceptable public viewpoints. Robust denunciations came from politicians across the political spectrum and included leading Republican politicians like Mitch McConnell, the Senate majority leader, and Paul Ryan, the House Speaker. The list also included members of the executive branch, including Attorney General Jeff Sessions and Vice President Mike Pence.

If it was not clear that white supremacy violated a fundamental public policy in the era of the Bob Jones case, it is clear now. The widespread condemnation of racism expressed by both the executive and legislative branches of the government provides convincing evidence that white supremacist actions violate fundamental public policy. Thus, those organisations that advocate white supremacy and organise white supremacist events do not qualify as tax-exempt under the Supreme Court’s reasoning, and the law requires the IRS to revoke their tax exemptions.

If the administration is going to “take the most vigorous actions” against white supremacists and neo-Nazis, the first step would be to review and revoke the tax exemption for any organizations that espouse these ideologies.

How will the government determine which organisations violate this fundamental public policy? Certainly, any group that sponsors violence against racial or ethnic minorities should not qualify for a tax exemption. Moreover, any group that proclaims the superiority of whites, or supports the separation of the population by race, should be scrutinised. Where an organisation’s mission statement suggests a focus on the superiority of whites, or the inferiority of other groups, the IRS should look closely at what the group does. (Though surprising, it is not unheard-of for a group to explicitly state its white supremacist purposes. The New Century Foundation, for example, says in its mission statement, “We also believe the European-American majority has legitimate group interests now being ignored.”)

Unless the IRS is able to determine that an exempt organisation does not advocate a racial policy that violates the fundamental public policy against white supremacy, it should lose its exemption.

Since the Bob Jones decision, the IRS has been reluctant to apply the fundamental public policy doctrine. With exceptions that could be numbered on one hand, the IRS has invoked fundamental public policy only to revoke the exemptions of private schools that discriminated on the basis of race. Moreover, after accusations that the IRS discriminated against Tea Party groups by delaying or denying their applications for non-profit status, the agency has been treading more carefully than ever.

The case of white supremacist groups is different: politicians and citizens on the left and the right have recognised the odiousness of white supremacist groups.

To be clear, public charities have an important historic role in espousing minority and unpopular views, and these groups should not be punished or censored simply because of their speech. Moreover, their articulating their bad ideas ultimately leads to society’s forcefully refuting those ideas, which, in the end, makes the cause of anti-racism stronger.

But a tax exemption is something different. The Constitution protects these groups’ right to free speech, but it doesn’t promise anyone freedom from taxes.

David J Herzig is a research fellow and professor at Valparaiso University School of Law. Samuel D Brunson is a professor at Loyola University Chicago School of Law. This piece originally appeared on the New York Times