Court Opinion

ID: 7279183
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:05:14.541044+00
Date Added: 2024-06-11T16:18:59.337289
License: Public Domain

WILKE Y, Circuit Judge,
concurring:
I concur unreservedly in Judge Tamm’s opinion for the court, all the more willingly because his opinion is a model of lucidity in a field of law — taxation — in which that quality is as rarely found in either judicial decisions or legislation as sunlight on the dark side of the moon.
Since we have decided no issue on the merits, except that the constitutional issues are sufficiently serious to require decision by a three-judge court, I believe it appropriate to raise a question for the consideration of the three-judge court which was not briefed by the parties and is not dealt with by our court’s opinion.
As I see it, the basis of our decision here is that there is a substantial constitutional question because the challenged tax provision discriminates on the basis of wealth (size), and because the Supreme Court is currently considering cases which may say that such distinctions need to be closely analyzed. Although other statutes are relevant, the vital statute at issue is 26 U.S.C. § 501(c)(3) (1970), quoted in footnote one of the court’s opinion. Making a careful analysis of this statute, the first part states why tax exemption is granted — and that relates to the purpose of the organization. Thereafter are listed several factors which will nullify the tax-exempt status granted by the first part of § 501(c)(3). One of the disqualifications for tax-exempt status is expressed in the phrase, “. . .no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, . .
And this disqualification phrase is what this ease is all about. 26 U.S.C. § 501(c)(3) first ties tax status to the purpose of the organization — and the “no substantial . . . influence legislation” disqualification test (like the disqualification reference to private earnings or political campaigns) is aimed at assuring some purity in that purpose.
It is arguable that a small organization that spends almost all of its funds lobbying is not organized or conducted for the same purpose as a large organization, which may spend quantitatively as much, but which proportionately devotes most of its activities to unquestionably exempt purposes. If we make an analysis by following the impact of the donor’s dollar, a gift to “Americans United” has “more punch” on the legis*299lative front than a gift to a large church organization which spends only 1% of its income on lobbying activities.
In that sense, the large organization is not engaged in what can reasonably be called “identical conduct.” The statute does not give any greater privilege of speech to large organizations — other than the greater amount of impact any group can have if it raises more money. Rather, the interpretation of equal protection sought by “Americans United” would give a greater right of speech — by emasculating the “purpose” rationale of § 501(c)(3) — to small organizations. We cannot ignore the “purpose” rationale, because purpose is the only ground for tax exemption under § 501(c)(3).
Furthermore, if the larger groups are seen as engaged in “identical conduct” —what is to be the bench mark? If the purpose of the tax statute is to be preserved at all, then the large church organizations probably must hold to devoting a small percentage of their resources to lobbying. Is that quantitative amount then to guide — so that a small organization, with total funds amounting only to the tiny percentage which the large organization devotes to this purpose, could devote 100% of its funds to lobbying and still be exempt?
In short, it is certainly arguable that small groups are not being treated differently by § 501(c)(3) because they are small, but because they are obviously operating for a different purpose if they devote their comparatively small funds on a much different proportionate basis to propaganda for legislation.
I have raised the issue above by stating only one side of the argument. There are, of course, counterarguments.1 We are not here deciding this or any other issue on the merits, but since neither party has seen fit to bring this issue to the courts’ attention, I feel it of sufficient importance to raise it for such consideration as the three-judge court and parties may wish to give it.

. Some counterarguments may be derived from William G. Halby’s article, “Is the Income Tax Unconstitutionally Discriminatory?”, 58 A.B.A..I. 1291 (December, 1972). Others may be inspired by the reflection that, if 200 years ago men revolted on the principle that “Taxation without representation is tyranny”, then today men may rise in righteous wrath because taxation with representation but beyond human comprehension is even worse.