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Chairman ROSTENKOWSKI. Professor Tribe, Professor Rosenthal, Professor Sanders, welcome to the committee. Gentlemen, we are pleased that you have joined us this morning to give us the benefit of your interpretation. We will take your testimony, and as I pointed out in my opening statement, I would like very much for you to summarize your testimony so that we can have a free exchange between you and the members of the Ways and Means Committee. Professor Tribe, if you will begin by identifying yourself and present your testimony, the committee is ready to proceed.
STATEMENT OF LAURENCE H. TRIBE, PROFESSOR OF
Mr. TRIBE. Thank you very much, Mr. Chairman and members of the committee. I am Laurence Tribe, professor of constitutional law at Harvard. I am honored by your invitation that I join you this morning to testify on this truly crucial matter. I hope I can be of help, and I will try to be as brief as I can.
I might call to the committee's attention the fact that, in addition to the prepared statement that was released yesterday, there are two brief supplementary statements, one dealing with the difficulties of a concurrent resolution as a possible way out of the impasse; the other, suggesting that, if there is to be such a resolution, it really ought to be one censuring the administration. The statement explains the theory.
Let me move to the substance. First of all, I think we should all recognize that there is no basis whatever for the administration's claim that the antidiscrimination requirement for tax exemption and tax deduction under sections 501(c)(3) and 170(c)(2) is something that the Internal Revenue Service simply made up in an exercise of "administrative fiat", as the President described it.
According to Deputy Attorney General Schmults, the origin of the current practice was a desire by President Nixon to win popular approval. Nothing could be further from the truth. The truth is that the decade-old antidiscrimination requirement, as Assistant Attorney General Reynolds conceded in his draft brief of January 29, was the result of one thing, and one thing only: a lawsuit against the Internal Revenue Service, a lawsuit that ended in a Federal court ruling that was affirmed by the U.S. Supreme Court in 1971.
The case is widely known as Green v. Connally. It was affirmed under the name of Coit v. Green.
Now, that ruling, quite simply, says on a nationwide basis, as a matter of declaring the law, that the Internal Revenue Service cannot grant exemptions and deductions for racially discriminatory private schools. The injunctive part of the ruling was limited to Mississippi simply because the parties were from Mississippi. At no point has the administration sought to explain how it intends to proceed without directly defying that still-binding decree entered in 1971-exactly how it plans to alter the policies that have been in force for the last decade.
Second, the 1971 decision in that case, in the Green case, was no aberration. It is absurd to say, as the administration has, that there is "no basis in law" for what was done, because every appel
late court that has considered the matter has reached exactly the same conclusion, that tax exemptions are already impermissible as a matter of statutory law and perhaps also of constitutional law, for discriminatory schools.
Third, the evidence is overwhelming that Congress, in dealing with the problem of racially discriminatory social clubs in 1976 and in its appropriations riders in 1979, accepted as its baseline the ineligibility of segregated schools for the special tax benefits that we are talking about here. Perhaps that is one reason so many Members of this body are a bit impatient with the suggestion that new legislation is needed.
The fact is that Congress has spoken several times, always consistent with the Nation's commitment to racial equality.
Fourth, I think it is crucial to recognize that what is at stake here is indeed the allocation of special tax benefits. We are not discussing, contrary to what the Department of Justice memorandums seem to assume, the use of the Internal Revenue Code to penalize unlawful or antisocial conduct by departing, on moral grounds, from some neutral way of measuring a taxpayer's net income. Most of the Government's arguments, so far as I can understand them, are thus aimed at a complete straw man.
It is as though the IRS had proposed, or the courts had approved, doubling the tax rate on people who discriminate against minorities, or denying tax deductions for the cost of business equipment unless it is purchased from a minority company.
Now, policies of that sort would involve bending a system that is designed to tax net income into a system for policing race relations. That is occasionally done without any express statutory mandate, but that is a rare practice, and it is not the kind of practice that is involved in the situation before this committee.
The Internal Revenue Service policies at issue before this committee, I think it must be made clearer than it usually has been, entail no bending at all. In fact, at stake here is a court ordered prohibition against twisting the tax system so as to favor race discrimination in private schools, by including the racially discriminatory activities of those schools in the very selective list of enterprises that are deemed to benefit the public enough to warrant sheltering their income from the usual taxes under section 501(c)(3), and to warrant matching the private money that they receive with public revenues in the form of tax deductions under section 170(c)(3).
Once the issue is seen in this light, it is much easier to understand why all of the appellate courts to consider it have agreed on this issue, and why a legal system committed to racial equality-in the Civil Rights Acts and in the Constitution itself-must be read to forbid making racist schools eligible for special tax benefits.
Fifth, only a racially discriminatory double standard, which I do not believe either the Congress or the administration could in good conscience enforce, would tell black schoolchildren and their parents, after they have succeeded in convincing the Treasury and the courts that the income tax system may not legally be used to reward racism in education, that they have still got to jump over one more hurdle. They are out of luck unless they get Congress to
write that principle expressly into the law, either by a statute or by a concurrent resolution.
There is no other group in our society that has been forced to leap over that extra hurdle. When other groups win victories in the administrative process that are then ratified uniformly over a decade by the courts, they can usually rest confident in the knowledge that they have succeeded. But this group is told: "No, you haven't made it until you get a new statute or resolution passed.' If we did impose that kind of rule across the board, the whole system would collapse. It would grind to a halt. Congress could not possibly read, much less write into law, more than a tiny fraction of the perfectly reasonable regulations and practices that agencies adopt, either on their own or under the impetus of judicial review, to fill in the gaps in congressional statutes. So, clearly, there is a dilemma here. If the administration really means that agencies are not to fill in such gaps without explicit direction from this body, then they propose to bring the Government of the United States to a halt. If they do not mean that, then they are proposing a racist double standard.
Sixth, the alleged need for further legislative action, either by a statute or by a resolution, to ratify or to approve the decade-old antidiscrimination requirement in this area bears all the hallmarks, I must say, of a politically inspired afterthought, a bailout borne of a backlash the administration simply did not expect.
No inside information is needed to reach that conclusion. The conclusion follows inescapably from the very fact that not one respectable legal argument has been offered, and I can't imagine one, for the Justice Department's strategy that simultaneously produced the alleged need for Congress suddenly to act, but moved to prevent the one thing that could have served as a legal check on whether the need was real or imagined—namely, a Supreme Court ruling in the Bob Jones and Goldsboro cases.
The Department of Justice, we must remember, had itself encouraged the Supreme Court, only last fall, to grant certiorari and to hear these cases for the specific purpose of affirming the Fourth Circuit, thus removing the doubts that some still had, and encouraging compliance with the antidiscrimination rules of the IRS. That was their position last fall. Nothing has happened since, and nothing the Department of Justice has said even remotely explains, even if they are right about the law, why it is that the Supreme Court should not be allowed to resolve the issue one way or the other-in accord with law.
If the Department of Justice is truly convinced, despite the conclusions they reached last fall, and despite the conclusions that every appellate court has reached, that current law doesn't support the antidiscrimination requirement, then obviously they ought to argue that view to the Supreme Court rather than hiding it in their pockets and trying to pull the case out from under the Court. If the Court agrees with them, which I doubt it would, then we would know that the law has got to be changed if we want to deny racially discriminatory schools special tax benefits. But if, as I suspect and as some in the administration undoubtedly fear-the Supreme Court rules that current law does, after all, support the IRS,
as every appellate court has said, then the case for having to pass a new law will evaporate.
Under our system of law, I think one should remind the administration is the province and duty of the judiciary to decide those questions-not of the executive branch acting unilaterally, particularly when it is complaining of executive fiat.
Now maneuvering the Supreme Court in this case into deciding nothing, resolving no doubts-by trying to make the controversy disappear attempting to make the case seem moot-must have been a rather tempting strategy for the administration, an administration that, as you all know, is considering removing judicial jurisdiction over various subjects when there is fear that we will not like what the Court says if it exercises such jurisdiction.
But there is a big difference between the bills that would remove the jurisdiction of the courts and what this administration is trying to do. Those bills have to be passed by the Congress, and Congress just might not like the idea.
Indeed, a few days ago the Conference of State Chief Justices unanimously resolved that those jurisdiction-limiting bills were profoundly unwise. But what the administration evidently proposes to do when it fears what the Court might rule is simply to bypass Congress by pulling cases out of the Supreme Court by mutual agreement among the parties. Of course, the parties in this case do not happen to include the black schoolchildren and their parents. Indeed, the administration says that these groups don't have standing to enter a case of this kind. So what the Department of Justice did in its sudden aboutface, I think it is important to recognize, is go to the Supreme Court on January 8 and say: "Surprise, there is no longer a case here!"
It is a popular technique with this administration. They tried it with the Equal Rights Amendment and almost succeeded.
It turns out it is not so easy, however, because under the Supreme Court's standards a case is not moot-that is, the controversy doesn't go away just because there is a nice, sweet deal between the Government and the parties. The Department of Justice had the task of convincing the Supreme Court of the United States, in order to get that Court to throw the case out, that the Government was not just inviting two schools, Bob Jones University and Goldsboro, to take a private dip into the U.S. Treasury.
And that's my eighth point: the Court had to be convinced that the Government was actually revoking the revenue rulings that had blocked those two schools and others like them from getting and keeping tax-exempt status. So it was crucial for the Court to be persuaded that there was a change, a real policy change reflected in the removal of the underlying antidiscrimination revenue rulings, and that is exactly what the Court was told on January 8 of this year.
Now as we all know, as soon as that happened, there was an enormous firestorm of reaction, seemingly unanticipated by the administration, which led the President and the Treasury Department to take a crucial step on January 18, informing both the Speaker of the House of Representatives and the President of the Senate that new legislation would be introduced, and that, until the new legislation was acted upon, racially discriminatory schools
other than Bob Jones and Goldsboro were in fact not going to be given tax benefits after all. Their applications for relief thus would not be acted upon, so they couldn't take advantage of the Government's January 8 posture until Congress had moved on the administration's proposed legislation. Of course, once Congress acted, then these other schools would be out in the cold again, because the proposed legislation would, if passed, deny them the tax benefits they sought. Now there is a deep question here: How could the administration possibly deliver on that promise, made on January 18 to the Speaker of the House and to the President of the Senate?
My ninth point: The only way the administration could really deliver on its January 18 promise to the Congress was by abrogating its January 8 promise to the Supreme Court.
The latter promise, you will remember, was this: We are getting rid of these revenue rulings. They are in the shredder right now, January 8. We have commenced the process of revoking them.
But if they were being revoked as of January 8, then where in the world would the Internal Revenue Service get the authority to do what the President promised the Congress on January 18 it would do-namely, put all applications by other discriminatory private schools in deep freeze until Congress acts?
Apparently it is their belief—and I think it might be useful to pursue this issue with the administration-that there is a statutory rule which allows the Internal Revenue Service to wait a fixed number of months while processing requests for tax exemption. But I think it is rather obvious that this provision does not authorize a refusal to process requests at all, putting them into a kind of legal purgatory until a new act of Congress is passed. And, in any case, Congress might not act at all within the specified number of months. In that event, the Internal Revenue Service would have to start granting exemptions-since the revenue rulings against discrimination would have been repealed.
What this means, ultimately, is that the Government has been profoundly deceptive in its dealings with Congress. It seems plain that the President's official statement of January 18, if it is to be believed, means that the revenue rulings in question cannot be revoked after all, and that the Supreme Court was thus misinformed.
Now it is not a light matter to misinform the Supreme Court of the United States on an issue that goes crucially to its jurisdiction, an issue that could decide the question of mootness. One might have expected the Department of Justice to "fess up," to tell the Supreme Court that things were not as they seemed after January 18. But in fact, not a word was said. Hence my ninth point: Whatever ultimately occurs, the court was seriously misled as it proceeded at its January 22 conference, to discuss Bob Jones and Goldsboro.
Why did the Department of Justice leave the Supreme Court with the false impression that the whole practice of denying taxexempt status to segregationist schools was being dropped? Was it a careless oversight? If you'd believe that, you'd believe anything. I put the question myself to the Solicitor General's Office yesterday afternoon, and I was told that I couldn't receive an official answer, but I was assured that the reason certainly "isn't that we