Monday, May 20, 2024

Youngkin Vetoes Bill Revoking Tax Exemption for Confederate Heritage Organizations

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Last Friday, Virginia Governor Glenn Youngkin vetoed a bill that would have revoked tax exemption for three confederate heritage organizations.  I posted about the bill here and here.  In my first post, I said that the Governor should veto the bill because it amounted to a kind of bill of attainder, since the revocation had to be based upon a legislative finding that certain confederate heritage groups were hate groups.  But that was before I knew that Virginia property tax exemption is granted to specific organizations by name.  In that case, the legislature should be entitled to revoke tax exemption by name.  As a practical matter there is no other way to revoke tax exemption.  Virginia's approach is particularly susceptible to abuse since legislators can vote for or against tax exemption for particular organizations simply because they approve or disapprove of the organization's views or speech.  Rather than directly address whether confederate heritage organizations are not charitable,  the Governor seized upon the "ripe for abuse" system of granting or denying tax exemption to favored or disfavored groups based on speech or beliefs.  From the Governor's veto statement:

Pursuant to Article V, Section 6 of the Constitution of Virginia, I veto House Bill 568/Senate Bill 517, eliminating tax exemptions for specific organizations.  The Commonwealth should pass necessary reforms regarding exemptions from local property and recordation taxes. Historically, the Constitution of Virginia permitted the General Assembly to grant exemptions from local taxation to specific nonprofit organizations through classification or designation, with a three-fourths vote in each house. In 2003, a constitutional amendment altered the process to ordinance-based exemptions, but those established before January 1, 2003, remained in force. 

The property tax exemption by designation is ripe for reform, delineated by inconsistencies and discrepancies. Specific civic associations and for-profit businesses are exempted, while others are not. Among these groups, some organizations have titles offensive in contemporary discourse, such as outdated references to the intellectually or developmentally disabled; some organizations reference political affiliations and engage in political contributions like the Ocean View Democratic and Social Club, and others are historical societies whose lineage is connected to contentious periods such as the Civil War, illustrated by the United Daughters of the Confederacy. 

A more effective approach to reform would involve broad-based measures, allowing local governments autonomy in determining tax exemptions and considering the locality's tax base and deed transfers. These considerations would be permitted when a county or city sets its real estate tax levy, helping to reduce effective tax increases through assessments.  Narrowly targeting specific organizations to gain or lose such tax exemptions sets an inappropriate precedent. Initially, the General Assembly granted exemptions through a three-quarter vote of both houses, but now, a simple majority can revoke them. Choosing winners and losers is imprudent and undermines the tax system's fairness.  Unfortunately, the General Assembly rejected my recommendations, which would have accomplished broad-based reform to address the issue of tax exemptions effectively.  Accordingly, I veto this bill.

I think it would be silly to revoke a confederate heritage organization's tax exemption anyway.  It's history and as long as the organizations aren't advocating hate -- even if they can be described as glorifying Rhett Butler and Scarlett O'Hara --  they should not be disqualified from tax exemption.  Government is constitutionally prohibited from subsidizing hate speech.  But the romanticized study and whitewashing of the worst crime in history, the effects of which are still felt, is not unsubsidizable hate speech.

 

darryll k. jones

 

https://lawprofessors.typepad.com/nonprofit/2024/05/youngkin-vetos-bill-revoking-tax-exemption-for-confederate-heritage-organizations.html

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