I posit, based on such history and the scant legislative history of 501(c)(3), that religious organizations were included as common-sense prevention to challenge of the tax code—“obviously religion is exempt, you anti-New Dealers, so don’t bother with a Constitutional challenge to taxation on First Amendment violations”—and to bolster secular charities claim to the exemption. But in the intervening decades we’ve forgotten that religious institutions’ exemption from taxes is not a matter of legislative grace. We’ve come to think of it as exempt only if it complies, as secular charities must do. Among religious institutions, churches, in particular, have unwittingly encouraged this view by “rendering unto Caesar,” which was basically the reasoning of Lee’s piece. Essentially, churches have complied with the exemption requirements of the tax code rather than asserting the right to be free from taxation.
Some might wonder why these issues are only coming to a head now, in 2014, when 501(c)(3) has been on the books since the New Deal. There are many, progressively dire reasons for that.
To start, the political speech prohibition did not exist until 1954. To punish and prevent political opponents from speaking out against him, then-Sen. Lyndon Johnson, who was in a contentious re-election campaign, pushed through an amendment to the tax code which prohibits “political activity” by 501(c)(3) entities. It is called the Johnson Amendment. Since the prohibition passed, it has only been lightly—and selectively—enforced. Various test cases have appeared in the courts trying to figure out just what political activity is prohibited, without much success.