California has moved one step closer to revoking the Boy Scouts’ tax exemption over their prohibition of openly gay leaders.
The California Assembly Committee on Judiciary approved the Youth Equality Act by a 6-3 vote on Monday. The bill, introduced by state Sen. Ricardo Lara (D-Long Beach), would prohibit organizations that discriminate on the basis of gender identity, sexual orientation, and religious affiliation from being considered a nonprofit organization entitled to tax-exempt status.
During a press conference, Lara said he was encouraged by the Boy Scouts’ recent decision to allow openly gay members. However, he noted the Boy Scouts still prohibited openly gay leaders.
“What are we telling our youth? That when you turn 18 you’re no longer welcomed?” he said. “It is premised under some very vile and sickening assumptions — that somehow when you turn 18 and you’re a LGBT man that you are somehow a threat to children.”
The California Senate voted 27-9 to pass the bill in May.
Lara said in the press conference that this is all about showing LGBT youth that “we care for them” by providing “equal access.”
Earlier this summer the Nonprofit Law Blog explained what this bill would do:
Last week, the California State Senate passed SB 323, or the Youth Equality Act, a bill that will amend Section 23701d in order to deny or revoke state tax exemption for youth organizations that discriminate. The bill, aimed at the Boy Scouts of America, was designed to bring nonprofit youth groups in line with California’s existing non-discrimination laws by levying state sales, use, and corporate taxes on those organizations with discriminatory practices. Specifically, SB 323 proposes the addition of the following language to the code:
“Notwithstanding any other law, an organization organized and operated exclusively as a public charity youth organization that discriminates on the basis of gender identity, race, sexual orientation, nationality, religion, or religious affiliation shall not be exempt from taxes imposed by this part.”
Critics of the measure are concerned about its constitutionality, citing free speech issues and U.S. Supreme Court cases that recognize a private organization’s right to make membership decisions. Although the Boy Scouts recently approved new guidelines allowing homosexual-identifying youths to become members, its policy still prohibits openly homosexual adults from serving as leaders.
Another criticism of the bill is that the language leaves open the meaning of gender identity. An expansive definition of gender identity could have unintended (or possibly intended) consequences on nonprofit schools and institutions that have traditionally been all-boys or all-girls.
The lobbying group for California nonprofits came out against the bill:
Intended to strip the Boy Scouts of their tax-exempt status due to their policies that bar gay, lesbian, bisexual and transgender people from serving as scouts or as leaders, if signed into law in its current form, SB 323 would do two things:
- “Public youth charities” — such as Scouts, Little Leagues, YMCAs and soccer leagues — that discriminate on the basis of gender identity, race, sexual orientation, nationality, religion, or religious affiliation would lose their California tax exempt status and would have to pay taxes on their donations and other income.
- Youth-serving organizations (nonprofit and other) who discriminate on the basis of gender identity, race, sexual orientation, nationality, religion, or religious affiliation would lose their ability to collect tax-free revenue from the intermittent sales of food, beverages and other merchandise made by the organization (such as Girl Scout cookies, hot dog sales at sports meets).
At CalNonprofits, we are opposed to discrimination by any organization — for-profit, religious organization, or nonprofit — on the basis of sexual orientation, gender identity, or other matters. At the same time, we believe that the tax exemption is the wrong lever through which to enforce anti-discrimination laws and end discriminatory practices.
Nonprofit organizations are expressions of free speech, and should be allowed to exist representing wide varieties of opinion. We should take action against discrimination through the civil and criminal courts, through public pressure, and by moving our donations and volunteer hours elsewhere.
The bill, introduced by State Sen. Ricardo Lara, names the Boy Scouts, Little League, Future Farmers of America and 19 other organizations as examples of groups that could be stripped of their tax-exempt status if found to discriminate based on gender identity, sexual orientation, nationality, race, religion or religious affiliation.
The measure also threatens tax-exempt status for public and private schools found to sponsor discriminatory youth groups. One critic said it could even threaten an exemption status held by a church.
“Traditional values regarding heterosexuality are being branded as the legal equivalent of racism, and so there’s the quite genuine fear that the tax code really is the battleground against the traditional churches,” said Alan Reinach, executive director of Church State Council, which opposes SB 323.
“It’s not about ‘live and let live.’ If the churches do not conform to the values of homosexuality, then we will lose our standing in society,” he said.
Here is the text of the bill. I don’t see how it could directly affect the tax exemption of a sponsoring religious or private institution, but I could be wrong. In any case, it’s clear where this sort of thing is headed. The State is so determined to root out Vile And Sickening thoughts and practices that it doesn’t care whose right to be wrong it destroys. How much safety will nonprofit religious institutions have in a political and cultural climate that sees some of their core beliefs as so Vile And Sickening that they and their supporters must be punished by the tax code?
They will call you hysterical and paranoid for raising the question. Don’t you believe it.