14 their constitutionally recognized freedom to make such schools available to their children. II Substantiality Substantiality of the Legal Issue The First Amendment freedom of appellants to associate at their own expense in schools of their choice is confirmed by the court below, A 26-27, on the holdings of this Court in Pierce v. Hill Military Academy, 268 U.S. 510, 45 S. Ct. 571 (1925); Griswold v. Connecticut, 31 U.S. 479, 85 S. Ct. 1678 1965 and School District of Abington v. Schempp. 374 U.S. 203, 83 S. Ct. 1560 1963, without regard to the acceptability of their mo tives, Scales v. United States, 367 U.S. 203, 81 S. Ct. 1469 1961, Elibrandt v. Russell, 384 U.S. 11, 86 S. C:. 1235 1966, or the truth or social utility of the beliefs involved. NAACP v. Button, 371 U.S. 415, 83 S. Ct. 328 1963. The constitutional determination contested on this appeal is the holding that this right of appellants is not abridged by "the withdrawal of benefits available on general terms." A, even though a restoration of exempt status is offered if appellants would now agree to adopt the Court's preferred form of education. "In the case before us exemptions and deductions Appellants urged upon the lower court the holding in 15 "Speiser certainly does not hold that a government acts impermissibly in withholding tax benefits from one who engages in activities that are resonably and constitutionally deemed contrary to the government's policy." A 25. It is appellants position that the holding of this Court Speiser is directly contrary to the reading given it by he lower court, that the essence of Speiser was to susin tax exemptions for an activity protected by the irst Amendment even though blatantly opposed "to the overnment's policy." Similarly we argue that the lower court in distinguishgconstitutionally between racial and religious asseation under the First Amendment, unduly limits the rinciple of "benevolent neutrality" announced by this ourt in Walz v. Tax Commission, 397 U.S. 664, 90 S. Ct. 409 (1970). In the opinion of appellants that case held hat tax exemptions uniformly applied are "passive" benets and do not constitute federal support of the organi on receiving them. We also note that the specific proibition in the First Amendment against the "establishment" of religion, makes the application of Walk to other Constitutionally protected classes, an a fortiori conclusion. The issue so posed is of major importance. There is no case cited by the lower court or existing to our knowldge which supports the conclusion in the appealed ruling that private schools must be subjected to the desegregation rules applicable to state supported public schools. A review of the precedent cited in the opinion as analogy the enforcement of such a desegregation policy shows hat the cited holdings concern either state support acvity or are the usual supremacy decisions over conflictgstate legislation. The present decision is not merely vel in applying to private citizens the policies governng the action of state bodies, but it opens a Pandora's of interpreting the constitution in the light of curt "federal policy," a principle that would go far to 16 ward eliminating every form of dissent voiced under the Bill of Rights-at least to the extent that the tax laws could be selectively enforced against the dissenter, the very situation condemned in Speiser. Another complete reversal of precedent is the Court's definition of "national policy" used to interpret the tax laws. The customary non-constitutional public policy ar gument in federal taxation has been referred to in a number of cases decided by this Court. The Court below has noted these. A 19, Lilly v. C.I.R., 343 U.S. 90, 72 S. Ct. 497 1952), C.I.R. v. Tellier, 383 U.S. 687, 86 S. Ct. 1118 1966) and Tank Truck Rentals, Inc. v. C.I.R.. 356 U.S. 30, 78 S. Ct. 507 1958). In each of these rulings deduction has been disallowed as against public policy only after it has been established that the questioned payment was in furtherance of an act defined as illegal by some specific statute. This concept of "ille gality was specifically adopted by Congress in the Tax Reform Act of 1969, Section 902(a) and (b), and i followed by the Internal Revenue Service, United States v. Omaha Lice Stock Traders Exchange, 366 F.2d 749 8th Cir. 1966). In short, the "national policy" declared by the District Court-but for the "constitutional ingre dients" on which it relies-would be in conflict with the established principles governing public policy determinations in tax law and would extend this doctrine not merely into an area where no illegality is involved, but into an area where the act in question is admittedly sanctioned by the Constitution itself. Whether such an extension is required by the constitutional considerations outlined in the ruling is clearly a major question of tax law. Substantiality in Effect The opinion recognized that the announced rule would affect all private schools of the Nation: "To obviate any possible confusion the court is not 17 for schools located in Mississippi. The underlying principle is broader, and is applicable to schools outside Mississippi with the same or similar badge of doubt." A 42-43, reference is made to IRS notices being sent to 15,000 ate schools, A 40, "to state whether or not its admispolicies are discriminatory." A 41. The issues on appeal are national in scope. Approximately 1,300,organizations are exempt under 26 U.S.C. § 501(c) This includes an estimated 22,000 private schools an additional 20,000 educational organizations. The e of Education of the Department of Health, Educaand Welfare has reported on 17.189 non-public ools having 6,305,000 pupils, or 13 of the total naal school enrollment, more than 90% of which have pecific religious affiliation. Appellants submitted to District Court a random sampling of 100 educational anizations from the exempt listings published by the sury, whose titles suggest an intended admis dis mination favoring five racial and twenty-one other stitutionally significant classes. Ali such Ali such schools uld be directly affected by the order appealed from. G. D. Webster. "Tax Problems of Non-Profit Organiz..ions." Journal of Taxation, Inc., New York (1968), Fourteer. papers ased on the Fourth Annual American University Confere ederal Tax Problems of Non-Profit Organizations, p. 121. Statistics of Non-Public Elementary and Secondary hols, 1965-6, Pub. OE-20111. An amicus brief, contra appellants' posion, was filed below on behalf of 300 Orthodox Jewish day schools. Twelve all-Negro private schools in Mississippi were also entified (Exh. 1) on the deposition of Rev. Jas. D. Gilbert taken anuary 30, 1970. Additional Negro private schools in Pennsyl nia were described at pp. 49-51 of Appellants Brief in Lemon V. urtzman, US. 91 S. Ct. 2105 (1971, recently decided this Court. We find no responsible source for totals of national rivate schools classified by admission standards. 18 'Immediacy: There is immediate, substantial and irreparable injury suffered by appellants. Until a year ago the established interpretation by the United States of 26 U.S.C. § 501 (c) (3) was that. absent significant state involvement, a non-profit segregated private school would be treated as exempt if it met the definition of an educational organization regardless of its admission policy (supra, p. 12). Appellants schools conformed to that definition. Now, for almost two years past because of this caseduring a time when the prayers of the complaint were being granted by interlocutory order to the point where the government moved to moot the case the appellants' schools have been deprived of the value of their statutory exemption, have lost irrecoverably their normal support from gifts, a result which the lower court foresaw even from its first injunction. Green, p. 1139. Second, as a matter of efficient administration of the courts, a present review of the issue is imperative, the only procedural alternative being an ultimate accumulation of tax suits and appeals in future tax years on a gift by gift basis which would involve a multiplicity of actions applicable to five or ten thousand individual schools. Third, a present decision would be of direct value to the United States itself. The Commissioner of Internal Revenue, on deposition agreed that an early Court determination of the validity of the new IRS policy would he of assistance in the administration of the tax laws: "Q. I take it then that the Internal Revenue Service has no objection to having the question put before the Court? |