The provision could have led "dark money" contributions to become tax deductible
The rule change was in the House's version of the tax plan but not in the Senate's
A controversial provision that would have permitted nonprofit groups to enter politics and could have led so-called “dark money” contributions to become tax deductible has been dropped from the GOP tax bill, according to a leading Senate Democrat.
Sen. Ron Wyden gave credit to his fellow Democrats for striking the Republican proposal to roll back the Johnson Amendment – which prevents tax-exempt charities from directly participating in politics – saying in a statement that they had stopped the measure “from being jammed into any final Republican tax deal.”
“I will continue to fight all attempts to eliminate this critical provision that keeps the sanctity of our religious institutions intact, prevents the flow of dark money in politics, and keeps taxpayer dollars from advancing special interest biddings,” the Oregon Democrat said in a statement.
The rule change was included in the House’s version of the tax plan but not in the Senate’s, leading to its inclusion in this week’s reconciliation process.
While the House measure had restrictions in place to prevent direct campaign contributions, campaign finance experts contend that the regulations were vague and could have led to tax-deductible “sham” charities supporting candidates.
Sen. James Lankford, R-Oklahoma, one of the biggest supporters of rolling back the Johnson Amendment, had this to say about its exclusion from the tax bill:
“I’m disappointed in the decision. … Sadly, there was a tremendous amount of misinformation spread about this tax provision. … Nonprofits are allowed to lobby Congress or their local elected officials, but the ambiguity of the current tax code keeps nonprofits in constant fear that they might have crossed a line that no other organization has to consider.”
Earlier this week, Sen. Orrin Hatch, R-Utah, hedged in his support for rolling back the Johnson Amendment, saying in a statement to CNN that he did not want taxpayers “forced to subsidize” political speech.
The Byrd Rule – an arcane Senate rule that determines what can be allowed it into a reconciliation bill – likely was a key factor in the decision to drop the rollback of the Johnson Amendment.
Campaign finance experts had warned that repealing the amendment would have led to a flood of “dark money” political contributions being funneled into newly tax-deductible nonprofits, including charities and churches.
The nonpartisan Joint Tax Committee estimated that the rule change would cost the Treasury $2.1 billion in lost revenue, assuming billions of dollars would be funneled through nonprofits.