Constitutionality of the Social Security Act

Amendments of 1983

An amendment to the Social Security Act repealing the exemption for nonprofit organizations, 

including religious organizations, thereby requiring such organizations to pay and withhold 

tax with respect to the Social Security Fund, does not violate the First Amendment’s Free 

Exercise or Establishment Clauses.

Assuming the tax payment and withholding requirement conflicts with the free exercise of 

religion in some cases, the government nevertheless has an overriding interest in securing the 

financial solvency of the fund and making sure that its coverage is comprehensive.

The repeal of the exemption does not violate the Establishment Clause because it has a clear 

secular purpose, does not inhibit or advance religion because it is neutral in its general 

application, and does not excessively entangle the government with religion. Social Security 

taxes are like other business and income taxes to which religious organizations are already 

subject.

February 14, 1984

M e m o r a n d u m O p i n i o n f o r t h e A s s i s t a n t A t t o r n e y G e n e r a l ,

O f f i c e o f L e g i s l a t i v e A f f a ir s

This responds to the request for our opinion whether § 102 of the Social 

Security Amendments of 1983 (Act), Pub. L. No. 98- 21, 97 Stat. 65 (1983), 

violates the First Amendment. We do not believe that § 102 violates either the 

Free Exercise Clause or the Establishment Clause of the First Amendment.

I. Background

The Act was passed in 1983 primarily in an effort to address certain financial 

problems facing the social security system. Section 102 of the Act, 97 Stat. 70, 

repealed the existing exemption applicable to employees of non-profit organizations, 42 U.S.C. § 410(a)(8)(B) and 26 U.S.C. § 3121(b)(8)(B), including 

“religious” organizations such as churches.1 As a result, payment of social

1 Prior to the repeal, 42 U.S.C. § 410(a)(8)(B) and 26 U.S.C. § 3121(b)(8)(B) exempted service for taxexempt organizations described in 26 U.S.C. § 501(c)(3) from the definition o f employment. However, the 

law permitted such non- profit organizations to waive their immunity voluntarily so that they could participate in the system if they wished. An estim ated 80 percent of the non-profit organizations to which the 

exemption applied had determined to participate in the system at the time the Act was being considered. H.R. 

Rep. No. 25, Part 1,98th Cong., 1st Sess. 15 (1983). Once an organization joined the system, it had to rem ain

Continued

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security taxes by these institutions for most of their employees is now mandatory rather than voluntary. Congress made this change because it was “deeply 

concerned” that more and more non-profit organizations were terminating their 

voluntary inclusion in the system, thereby threatening the retirement benefits 

of their employees. H.R. Rep. No. 25, Part I, 98th Cong., 1st Sess. 16-17 

(1983). A larger concern, applicable generally to the coverage and financing 

provisions of the Act, was the restoration of the financial soundness of the Old 

Age and Survivor Insurance Program. Id. at 3,13. The mandatory inclusion of 

the non-profit organizations, for example, is expected to raise $2.3 billion 

dollars over the next two years, about half of which will come from religious 

organizations. Written Statement of John E. Chapoton, Assistant Secretary for 

Tax Policy, Department of the Treasury, Before the Senate Finance Committee 

(Dec. 14, 1983).

There was very little debate over § 102, beyond its inclusion in summaries of 

the Act’s provisions. See, e.g., 129 Cong. Rec. 4496 (1983) (statement of Rep. 

Rostenkowski); id. at 5470 (statement of Sen. Dole).2 The House Report, 

however, did note that Congress had made coverage voluntary when it extended the system to non-profit organizations in 1950 because of concerns by 

religious groups over “Federal influence over religious activities” and “separation of church and State.” H.R. Rep. No. 25, Part I, supra, at 16. These concerns 

had been addressed by at least one of the commissions examining reform of the 

system. Report o f the Universal Social Security Coverage Study Group on the

D esirability and Feasibility o f Social Security Coverage fo r Employees of

Federal, State, and Local Governments and Private, Nonprofit Organizations

258-59 (1980).3 Because the House Report noted that these concerns had been 

raised when optional coverage was extended to these groups in 1950 and then 

went on to explain the policy reasons for including the non-profit organization 

employees in the Act, we must assume that Congress was aware of the First 

Amendment considerations and issues which would be raised, but determined 

that the proposal was not unconstitutional.

1 (. . . continued)

in it for a m inim um o f ten years before it could terminate coverage for its employees. Id. The Act did not 

repeal the exem ption available for m inisters or members o f religious orders. 42 U.S.C. § 410(a)(8); 26 U.S.C. 

§ 3121(b)(8). These classes of persons m ay file for an exem ption from coverage for their self employment 

earnings, a choice they must generally m ake within two years o f ordination. Only individuals who are neither 

m inisters nor mem bers of religious orders are covered by the change in the Act.

2 T here w as a short debate on what the effective date of § 102 should be. See 129 Cong. Rec. 6914-16 

(1983).

3 This Report, in turn, relied in part on an opinion from Professor Norman Dorsen of New York University 

Law School. Id. at 261-65. Both the Report and Professor Dorsen concluded that an Establishment Clause 

attack would probably fail. However, Professor Dorsen did not believe that protecting the financial security 

o f the system was a sufficiently compelling state interest to overcome the Free Exercise interests of those who 

had conscientious religious objections to paying into the system, id. at 265, and therefore felt that an 

exem ption for those holding contrary religious beliefs had to be included to prevent a violation of the Free 

Exercise Clause. However, the Supreme Court has subsequently made it clear that Professor D orsen’s 

evaluation o f the weight that would be accorded the governm ent's interest in a strong social security system 

was incorrect. See United States v. Lee, 455 U.S. 252 (1982) (discussed below).

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Whenever called upon to judge the constitutionality of an Act 

of Congress — “the gravest and most delicate duty that this 

Court is called upon to perform,” Blodgett v. Holden, 275 U.S.

142,148 (1927) (Holmes, J.) — the Court accords “great weight 

to the decisions of Congress.” Columbia Broadcasting System,

Inc. v. Democratic National Committee, 412 U.S. 94,102 (1973).

The Congress is a coequal branch of government whose Members take the same oath we do to uphold the Constitution of the 

United States. As Justice Frankfurter noted in Joint Anti-Fascist

Refugee Committee v. McGrath, 341 U.S. 123,164 (1951) (concurring opinion), we must have “due regard to the fact that this 

Court is not exercising a primary judgment but is sitting in 

judgment upon those who also have taken the oath to observe 

the Constitution and who have the responsibility for carrying on 

government.” The customary deference accorded the judgments 

of Congress is certainly appropriate when, as here, Congress 

specifically considered the question of the Act’s constitutionality.

Rostker v. Goldberg, 453 U.S. 57, 64 (1981).

The constitutionality of § 102 has been raised in the discussion of S. 2099, a 

bill to postpone the effective date of § 102 for two years, that was introduced by 

Senator Jepsen and is now under consideration by the Senate Finance Committee. We discuss below the two possible First Amendment grounds of attack on 

§ 102. We agree with Congress’ sub silentio conclusion that § 102 is constitutional.

II. Free Exercise Clause

The Constitution provides that “Congress shall make no law . . . prohibiting 

the free exercise” of religion. U.S. Const, amend. I, § 1. Section 102 has been 

attacked, see 129 Cong. Rec. 32611-12 (1983), on the grounds that mandating 

contributions by individuals and organizations whose sincere religious beliefs 

prohibit participation in the social security system violates the free exercise of 

their religious beliefs. The Supreme Court has recently articulated the analytical framework for this question in United States v. Lee, 455 U.S. 252 (1982). 

The Lee opinion makes clear that the government’s interest in assuring mandatory and continuous participation in and contribution to the social security 

system is extraordinarily high. In Lee, an Amish farmer refused to withhold 

social security taxes from his Amish employees or to pay the employer’s share 

of such taxes because he believed that payment of the taxes and receipt of the 

benefits would violate the Amish faith.4 Id. at 254—55. He claimed, and the 

Court accepted his argument, that imposition of social security taxes violated 

his First Amendment free exercise rights and those of his Amish employees. Id.

at 255, 257.

4 ‘T h e Amish believe that there is a religiously based obligation to provide for their fellow members the 

kind of assistance contemplated by the social security system .... We therefore accept appellee's contention 

that both payment and receipt of social security benefits is forbidden by the Amish faith." Id. at 257.

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The conclusion that there is a conflict between the Amish faith 

and the obligations imposed by the social security system is only 

the beginning, however, and not the end of the inquiry. Not all 

burdens on religion are unconstitutional. See, e.g., Prince v. 

Massachusetts, 321 U.S. 158 (1944); Reynolds v. United States,

98 U.S. 145 (1879). The state may justify a limitation on religious liberty by showing that it is essential to accomplish an 

overriding governmental interest.

Id. at 257-58. The Court then identified the government’s compelling interest 

assuring “mandatory and continuous participation in and contribution to the 

social security system:”

The social security system in the United States serves the 

public interest by providing a comprehensive insurance system 

with a variety of benefits available to all participants, with costs 

shared by employers and employees. . . . The design of the 

system requires support by mandatory contributions from covered employers and employees. This mandatory participation is 

indispensable to the fiscal vitality of the social security system.

. . . Moreover, a comprehensive national social security system 

providing for voluntary participation would be almost a contradiction in terms and difficult, if not impossible, to administer.

Id. at 258-59 (footnotes omitted). A remaining inquiry in the Lee case was 

whether accommodating the Amish belief would unduly interfere with fulfillment of the governmental interest. The Court focused on the fact that the social 

security contributions are a tax and that in the area of taxation, religious practices 

must yield to the government’s interest in maintaining an organized society.

The tax system could not function if denominations were 

allowed to challenge the tax system because tax payments were 

spent in a manner that violates their religious belief. See, e.g.,

Lull v. Commissioner, 602 F.2d 1166 (CA4 1979), cert, denied,

444 U.S. 1014 (1980); Autenrieth v. Cullen, 418 F.2d 586 (CA9 

1969), cert, denied, 397 U.S. 1036 (1970). Because the broad 

public interest in maintaining a sound tax system is of such a 

high order, religious belief in conflict with the payment of taxes 

affords no basis for resisting the tax.

Id. at 260.5 The Lee decision was decided by the Supreme Court in a unanimous 

judgment.6 The Court held that compelling an individual to participate in the

5 Thus, cases involving application o f taxes are distinguishable from those involving less compelling 

governm ent interests such as education, see Wisconsin v. Yoder, 406 U.S. 205 (1972), or labor management 

relations. Catholic Bishop v. NLRB, 559 F.2d 1112 (7th Cir. 1977), a ffd on statutory grounds, 440 U.S. 506

(1979). See Parker v. Commissioner, 365 F.2d 792, 795 (8th Cir. 1966), cert, denied, 385 U.S. 1026 (1967). 

See also Jaggard v. Commissioner, 582 F.2d 1189 (8th Cir. 1978), cert, denied, 440 U.S. 913 (1979); Graves

Continued

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social security system is not an impermissible interference with that individual’s 

constitutional right to the free exercise of his religion.7

Turning to § 102, we assume, as the Court did in Lee, that there are religious 

organizations whose tenets would be offended by payments on behalf of 

employees into the social security system. Because this is “only the beginning, 

however, and not the end of the inquiry,” id. at 257, the next issue is whether 

there is a compelling governmental interest that will overcome the imposition 

on the religious liberty of those individuals who would have conscientious 

objections to mandatory coverage by the system. We have little difficulty in 

concluding that the courts will find that the same interest at stake in Lee was 

implicated in passage of § 102. Congress, in discussing § 102, emphasized 

both its concern that employees of non-profit organizations not “forfeit the 

advantages of a nearly universal social insurance system,” H.R. Rep. No. 25, 

supra, at 16, and the need to protect the solvency of the system by spreading the 

coverage as broadly as possible to gain extra revenue. S. Rep. No. 23, 98th 

Cong., 1st Sess. 12 (chart detailing revenue gain).8 If the stability of the social 

security system and the administrative advantages of universal coverage were 

sufficient in 1982 to overcome free exercise rights as the Court determined in 

the Lee case, we believe that those interests have, if anything, become stronger 

given the broadly based and bipartisan consensus in 1983 that without the Act 

the financial soundness of the entire system was in jeopardy.

Finally, we believe that a court would conclude, as in Lee, that accommodation of those individuals and organizations with religious objections, while 

mandating coverage of others, including religious organizations, with no religious objection to the social security system, would unduly interfere with 

fulfillment of the governmental interest. The Supreme Court recognized that 

Congress grants exemptions to various taxing schemes, including the social 

security system. In fact, in Lee the Court noted that Congress had provided an 

exemption from the system for self employed Amish because of their religious 

objections. 26 U.S.C. § 1402(g). The Court stated that this was a reasonable 

accommodation,9 but did not draw from this conclusion any rule that Congress

5 (... continued)

v. Commissioner, 579 F.2d 392 (6th Cir. 1978), cert, denied, 440 U.S. 946 (1979); Winters v. Commissioner,

468 F.2d 778, 781 (2d Cir. 1972), Basic Unit Ministry v. United States, 511 F. Supp. 166, 169(D.D.C. 1981), 

affd , 670 F.2d 1210 (D.C. Cir. 1982); Varga v. United States, 467 F. Supp. 1113, 1118 (D. Md. 1979), a ffd

mem., 618 F.2d 106 (4th Cir. 1980). Cf. Ward v. Commissioner, 608 F.2d 599 (5th Cir. 1979), cert, denied,

446 U.S. 918 (1980).

6 Justice Stevens wrote a separate opinion concurring in the judgment. Id. at 261.

7 See also Olsen v. Commissioner, 709 F.2d 278 (4th Cir. 1983) (self employment lax); Victory Baptist

Temple, Inc. v. Industrial Comm'n, 422 N.E.2d 819, 2 Ohio App. 3d 418 (Ct. App.) (workmen’s compensation), cert, denied, 459 U.S. 1086 (1982).

8 M oreover, § 102 is located in Title I of the Act which is entitled "Provisions Affecting the Financing of 

the Social Security System.” 97 Stat. 65. Congress’ ovem ding interest in expanding coverage, such as by 

including em ployees o f nonprofit groups and new federal employees and by preventing terminations by State 

and local governments, to new sources of revenue in order to shore up the system is evident in all three 

reports. H.R. Rep. No. 47, 98th Cong., 1st Sess. 118-19 (1983); S. Rep. No. 23, 98th Cong., 1st Sess. 1, 12 

(1983); H.R. Rep. No. 25, Part I, 98th Cong., 1st Sess. 3, 13 (1983).

9 “Confining the § 1402(g) exem ption to the self employed provided for a narrow category which was 

readily identifiable.” United States v. Lee, 455 U.S. at 261.

27
was compelled to extend the exemption to all other Amish. Rather, the Court 

concluded the opinion by saying:

Congress and the courts have been sensitive to the needs flowing from the Free Exercise Clause, but every person cannot be 

shielded from all the burdens incident to exercising every aspect 

of the right to practice religious beliefs. Granting an exemption 

from social security taxes to an employer operates to impose the 

employer’s religious faith on the employees .... The tax 

imposed on employers to support the social security system 

must be uniformly applicable to all, except as Congress provides 

explicitly otherwise.

455 U.S. at 261. Because of the government’s overwhelming interest in a social 

security system which is as uniform as possible, the Free Exercise Clause does 

not prohibit the non-discriminatory application of a standard tax to a religious 

organization or its employees. We therefore believe that the elimination by 

§ 102 of the exemption for non-profit organizations, including religious ones, 

is permissible even if it does offend the religious convictions of some who will 

be required to participate.

III. Establishment Clause

The Constitution also provides that “Congress shall make no law respecting 

an establishment of religion.” U.S. Const, amend. I, § 1. Section 102 has been 

attacked on the grounds that compelling the participation of churches will 

inevitably entangle the government in the affairs of the churches, thereby 

violating the Establishment Clause.

Whether a statute violates the Establishment Clause is frequently analyzed 

under the three-part test articulated in Lemon v. Kurtzman, 403 U.S. 602, 612— 

13 (1971). First, the challenged statute must have a secular purpose. Section 

102 has at least two bona fid e secular purposes: providing income security for 

workers and their families by insuring that they are protected by the social 

security system and providing money to the underfunded system’s trust funds. 

Second, the primary effect of the challenged statute must be one that neither 

advances nor inhibits a particular religion. The Social Security tax’s primary 

purpose raising revenue does not inhibit religion. Cf. United States v. Lee, 455 

U.S. 252, 263 (1982) (Stevens, J., concurring) (concluding that “there is 

virtually no room for a ‘constitutionally required exemption’ on religious 

grounds from a valid tax law that is entirely neutral in its general application”).

Third, the statute must not foster excessive government entanglement with 

religion. Excessive entanglement involves some of the principal evils at which 

the Establishment Clause was aimed: government sponsorship, financial support or active involvement by the sovereign in a religion. Lemon v. Kurtzman,

403 U.S. at 612. For example, in Lemon the Supreme Court struck down a 

statute providing reimbursement to parochial schools for the salaries of teach28
ers who taught non religious subjects. The Court held that the very effort by the 

state to ensure that the money was properly spent would require a degree of 

oversight and surveillance that would entangle the government. Id. at 619-20. 

The churches would no longer be the exclusive judges of the teachers’ conduct. 

Thus, courts must examine whether enforcement of the law will impinge on the 

church’s substantive decisionmaking power or intrude on questions of church 

doctrine.

We do not believe that the mere transmission to the government of money 

for social security taxes will involve excessive entanglement of the churches 

and the federal government.10 Churches must presently pay some federal taxes, 

such as excise taxes on telephones and income taxes on unrelated business 

income. Moreover, they already are obligated to withhold income taxes from 

their employees. See Eighth Street Baptist Church, Inc. v. United States, 295 F. 

Supp. 1400 (D. Kan. 1969), a ffd , 431 F.2d 1193 (10th Cir. 1970) (per curiam). 

We are not aware of any case successfully challenging this essentially administrative duty as excessively entangling for the churches. The Act will not force 

the churches to share their decisionmaking power: they are free to allocate their 

resources as they see fit after they pay their taxes. Because it is permissible for 

Congress to impose non-discriminatory and uniform taxes on churches on the 

same basis as other entities and since churches already are required to withhold 

income taxes for their lay employees, we do not believe that requiring churches 

to pay the employer’s portion of applicable social security taxes or to withhold 

the employee’s portion violates the Establishment Clause.11

Conclusion

Section 102 of the Act violates neither the Free Exercise Clause nor the 

Establishment Clause of the First Amendment. We will be glad to discuss this 

matter with you if you have any further questions.

T h e o d o r e B . O l s o n

Assistant Attorney General

Office of Legal Counsel

10 Walz v. Tax Comm 'n, 397 U.S. 664 (1970), is not to the contrary. In Walz, the Court upheld a state’s tax 

exemption for church property against an Establishment Clause challenge. The Court pointed out that 

removing the tax exemption might lead to more church entanglement with the government since liens, 

foreclosures and lawsuits would arise if the property were taxed. 397 U.S. at 674. Although some commentators have argued that this means that exemptions are constitutionally required, see Note, Tax Exemptions,

Subsidies and Religious Freedom After Walz v. Tax Commission, 45 N.Y.U. L. Rev. 876 (1970), the Supreme 

C ourt’s summary distinguishing of the exem ption for self-employed Amish in United States v. Lee, 455 U.S. 

252, 261 (1982), lends little credence to this argument. Rather, Walz should be read for the proposition that 

tax exem ptions themselves are not unconstitutional.

11 It is also instructive that over the years a large number o f churches have opted into the system voluntarily, 

see supra note 1, without any evidence of impermissible entanglement.

29