Tax bill could create deduction for ‘dark money’ political donations

Tax bill could create deduction for ‘dark money’ political donations
© Getty Images

A provision being debated by the panel charged with hashing out a final tax-reform bill could make so-called dark money political donations tax-deductible, some argue. 

House and Senate negotiators are debating whether to include a repeal of the Johnson Amendment – a decades-old tax provision barring nonprofits from direct participation in politics – in the final tax bill. 

The House version of the tax overhaul included the Johnson Amendment repeal, while the Senate version did not. 

ADVERTISEMENT

According to a CNN report, however, repealing the measure could allow people to deduct from their taxes what are essentially political donations funneled through nonprofit organizations, like churches.  

The nonpartisan Joint Committee on Taxation estimates that the change to the tax code could cost the U.S. $2.1 billion in lost revenue over the next decade, because billions of dollars of political donations could become tax-deductible by going through nonprofits.

The Johnson Amendment has long been opposed by many conservatives and evangelicals, who say the provision infringes on their First Amendment rights to free speech. 

President TrumpDonald John TrumpDems flip Wisconsin state Senate seat Sessions: 'We should be like Canada' in how we take in immigrants GOP rep: 'Sheet metal and garbage' everywhere in Haiti MORE himself has billed the Johnson Amendment as a violation of religious liberties. He signed an executive order earlier this year directing the Treasury Department to be lenient in its enforcement of the law.

Supporters, however, say that the provision shields nonprofits from outsized political influence. For example, political donors could threaten to withhold money to a nonprofit unless the organization supports a certain politician, bill or initiative, according to CNN.