                Constitutionality of the Social Security Act
                           Amendments of 1983

An amendment to the Social Security Act repealing the exemption for nonprofit organizations,
  including religious organizations, thereby requiring such organizations to pay and withhold
  tax with respect to the Social Security Fund, does not violate the First Am endment’s Free
  Exercise or Establishm ent Clauses.

Assuming the tax payment and withholding requirement conflicts with the free exercise of
  religion in some cases, the government nevertheless has an overriding interest in securing the
  financial solvency of the fund and making sure that its coverage is comprehensive.

The repeal of the exemption does not violate the Establishment Clause because it has a clear
  secular purpose, does not inhibit or advance religion because it is neutral in its general
  application, and does not excessively entangle the government with religion. Social Security
  taxes are like other business and income taxes to which religious organizations are already
  subject.

                                                                                      February 14, 1984

       M   em orandum         O p in io n   for t h e    A s s is t a n t A t t o r n e y G e n e r a l ,
                               O f f ic e   of   L e g is l a t iv e A f f a ir s


  This responds to the request for our opinion whether § 102 of the Social
Security Amendments of 1983 (Act), Pub. L. No. 98- 21, 97 Stat. 65 (1983),
violates the First Amendment. We do not believe that § 102 violates either the
Free Exercise Clause or the Establishment Clause of the First Amendment.

                                             I. Background

  The Act was passed in 1983 primarily in an effort to address certain financial
problems facing the social security system. Section 102 of the Act, 97 Stat. 70,
repealed the existing exemption applicable to employees of non-profit organi­
zations, 42 U.S.C. § 410(a)(8)(B) and 26 U.S.C. § 3121(b)(8)(B), including
“religious” organizations such as churches.1 As a result, payment of social
  1 Prior to the repeal, 42 U.S.C. § 410(a)(8)(B ) and 26 U .S.C. § 3121(b)(8)(B ) exem pted service fo r tax-
exem pt organizations described in 26 U.S.C. § 501(c)(3) from the definition o f em ploym ent. However, the
law perm itted such non- profit organizations to w aive their im m unity voluntarily so that they could p artici­
pate in the system if they wished. An estim ated 80 percent o f the non-profit organizations to w hich the
exem ption applied had determ ined to participate in the system at the time the A ct was being considered. H.R.
Rep. No. 25, Part 1,9 8 th Cong., 1st Sess. 15 (1983). Once an organization join ed the system , it had to rem ain
                                                   Continued

                                                       23
security taxes by these institutions for most of their employees is now manda­
tory rather than voluntary. Congress made this change because it was “deeply
concerned” that more and more non-profit organizations were terminating their
voluntary inclusion in the system, thereby threatening the retirement benefits
of their employees. H.R. Rep. No. 25, Part I, 98th Cong., 1st Sess. 16-17
(1983). A larger concern, applicable generally to the coverage and financing
provisions of the Act, was the restoration of the financial soundness of the Old
Age and Survivor Insurance Program. Id. at 3,13. The mandatory inclusion of
the non-profit organizations, for example, is expected to raise $2.3 billion
dollars over the next two years, about half of which will come from religious
organizations. Written Statement of John E. Chapoton, Assistant Secretary for
Tax Policy, Department of the Treasury, Before the Senate Finance Committee
(Dec. 14, 1983).
   There was very little debate over § 102, beyond its inclusion in summaries of
the Act’s provisions. See, e.g., 129 Cong. Rec. 4496 (1983) (statement of Rep.
Rostenkowski); id. at 5470 (statement of Sen. Dole).2 The House Report,
however, did note that Congress had made coverage voluntary when it ex­
tended the system to non-profit organizations in 1950 because of concerns by
religious groups over “Federal influence over religious activities” and “separa­
tion of church and State.” H.R. Rep. No. 25, Part I, supra, at 16. These concerns
had been addressed by at least one of the commissions examining reform of the
system. R eport o f the Universal Social Security Coverage Study Group on the
D esirability an d Feasibility o f Social Security Coverage fo r Employees of
Federal, State, and Local Governments a n d Private, Nonprofit Organizations
258-59 (1980).3 Because the House Report noted that these concerns had been
raised when optional coverage was extended to these groups in 1950 and then
went on to explain the policy reasons for including the non-profit organization
employees in the Act, we must assume that Congress was aware of the First
Amendment considerations and issues which would be raised, but determined
that the proposal was not unconstitutional.


   1 (. . . continued)
in it fo r a m inim um o f ten years before it could term inate coverage fo r its employees. Id. The Act did not
repeal the exem ption available for m inisters o r m embers o f religious orders. 42 U.S.C. § 410(a)(8); 26 U.S.C.
§ 3121(b)(8). T hese classes o f persons m ay file for an exem ption from coverage for their self employment
earn in g s, a choice they m ust generally m ake w ithin two years o f ordination. Only individuals w ho are neither
m inisters n o r m em bers o f religious orders are covered by the change in the Act.
   2 T h e re w as a short debate on what th e effective date o f § 102 should be. See 129 Cong. Rec. 6914-16
(1983).
   3 T h is R eport, in turn, relied in part on an opinion from Professor N orm an Dorsen o f New York University
Law School. Id. at 2 6 1 -6 5 . Both the R eport and Professor D orsen concluded that an Establishm ent Clause
attack w ould probably fail. However, P rofessor Dorsen d id not believe that protecting the financial security
o f the system w as a sufficiently compelling state interest to overcom e the Free Exercise interests o f those who
had co n scien tio u s religious objections to paying into the system , id. a t 265, and therefore felt that an
exem ption fo r those holding contrary relig io u s beliefs had to be included to prevent a violation of the Free
E xercise C lause. H ow ever, the Suprem e C ourt has subsequently m ade it clear that Professor D orsen’s
evaluation o f the w eight that would be accorded the g o v ern m en t's interest in a strong social security system
w as incorrect. See United States v. Lee, 4 5 5 U.S. 252 (1982) (discussed below).

                                                        24
            Whenever called upon to judge the constitutionality of an Act
         of Congress — “the gravest and most delicate duty that this
         Court is called upon to perform,” B lodgett v. Holden, 275 U.S.
         142,148 (1927) (Holmes, J.) — the Court accords “great weight
         to the decisions of Congress.” Columbia Broadcasting System,
         Inc. v. D em ocratic National Committee, 412 U.S. 94,102 (1973).
         The Congress is a coequal branch of government whose Mem­
         bers take the same oath we do to uphold the Constitution of the
         United States. As Justice Frankfurter noted in Joint Anti-Fascist
         Refugee Committee v. McGrath, 341 U.S. 123,164 (1951) (con­
         curring opinion), we must have “due regard to the fact that this
         Court is not exercising a primary judgment but is sitting in
         judgment upon those who also have taken the oath to observe
         the Constitution and who have the responsibility for carrying on
         government.” The customary deference accorded the judgments
         of Congress is certainly appropriate when, as here, Congress
         specifically considered the question of the Act’s constitutionality.
Rostker v. Goldberg, 453 U.S. 57, 64 (1981).
   The constitutionality of § 102 has been raised in the discussion of S. 2099, a
bill to postpone the effective date of § 102 for two years, that was introduced by
Senator Jepsen and is now under consideration by the Senate Finance Commit­
tee. We discuss below the two possible First Amendment grounds of attack on
§ 102. We agree with Congress’ sub silentio conclusion that § 102 is constitutional.

                                    II. Free Exercise Clause

   The Constitution provides that “Congress shall make no law . . . prohibiting
the free exercise” of religion. U.S. Const, amend. I, § 1. Section 102 has been
attacked, see 129 Cong. Rec. 32611-12 (1983), on the grounds that mandating
contributions by individuals and organizations whose sincere religious beliefs
prohibit participation in the social security system violates the free exercise of
their religious beliefs. The Supreme Court has recently articulated the analyti­
cal framework for this question in United States v. Lee, 455 U.S. 252 (1982).
The Lee opinion makes clear that the government’s interest in assuring manda­
tory and continuous participation in and contribution to the social security
system is extraordinarily high. In Lee, an Amish farmer refused to withhold
social security taxes from his Amish employees or to pay the employer’s share
of such taxes because he believed that payment of the taxes and receipt of the
benefits would violate the Amish faith.4 Id. at 254—55. He claimed, and the
Court accepted his argument, that imposition of social security taxes violated
his First Amendment free exercise rights and those of his Amish employees. Id.
at 255, 257.
  4 ‘T h e Amish believe that there is a religiously based obligation to provide for their fellow mem bers the
kind o f assistance contem plated by the social security system .... We therefore accept appellee's contention
that both paym ent and receipt o f social security benefits is forbidden by the Amish faith." Id. at 257.

                                                     25
          The conclusion that there is a conflict between the Amish faith
          and the obligations imposed by the social security system is only
          the beginning, however, and not the end of the inquiry. Not all
          burdens on religion are unconstitutional. See, e.g., Prince v.
          M assachusetts, 321 U.S. 158 (1944); Reynolds v. United States,
          98 U.S. 145 (1879). The state may justify a limitation on reli­
          gious liberty by showing that it is essential to accomplish an
          overriding governmental interest.
Id. at 257-58. The Court then identified the government’s compelling interest
assuring “mandatory and continuous participation in and contribution to the
social security system:”
              The social security system in the United States serves the
          public interest by providing a comprehensive insurance system
          with a variety of benefits available to all participants, with costs
          shared by employers and employees. . . . The design of the
          system requires support by mandatory contributions from cov­
          ered employers and employees. This mandatory participation is
          indispensable to the fiscal vitality of the social security system.
          . . . Moreover, a comprehensive national social security system
          providing for voluntary participation would be almost a contra­
          diction in terms and difficult, if not impossible, to administer.
Id. at 258-59 (footnotes omitted). A remaining inquiry in the Lee case was
whether accommodating the Amish belief would unduly interfere with fulfill­
ment of the governmental interest. The Court focused on the fact that the social
security contributions are a tax and that in the area of taxation, religious practices
must yield to the government’s interest in maintaining an organized society.
             The tax system could not function if denominations were
          allowed to challenge the tax system because tax payments were
          spent in a manner that violates their religious belief. See , e.g.,
          Lull v. Commissioner, 602 F.2d 1166 (CA4 1979), cert, denied,
          444 U.S. 1014 (1980); Autenrieth v. Cullen, 418 F.2d 586 (CA9
          1969), cert, denied, 397 U.S. 1036 (1970). Because the broad
          public interest in maintaining a sound tax system is of such a
          high order, religious belief in conflict with the payment of taxes
          affords no basis for resisting the tax.
Id. at 260.5 The Lee decision was decided by the Supreme Court in a unanimous
judgment.6 The Court held that compelling an individual to participate in the

  5 T hus, cases involving application o f taxes are distinguishable from those involving less com pelling
governm ent interests such as education, see Wisconsin v. Yoder, 406 U.S. 205 (1972), or labor m anagement
relatio n s. Catholic Bishop v. NLRB, 5 5 9 F.2d 1112 (7th Cir. 1977), a ffd on statutory grounds, 440 U .S. 506
(1979). See Parker v. Commissioner, 365 F.2d 792, 795 (8th Cir. 1966), cert, denied, 385 U.S. 1026 (1967).
See also Jaggard v. Commissioner, 582 F.2d 1189 (8th Cir. 1978), cert, denied, 440 U.S. 913 (1979); Graves
                                                   C ontinued

                                                     26
social security system is not an impermissible interference with that individual’s
constitutional right to the free exercise of his religion.7
   Turning to § 102, we assume, as the Court did in Lee, that there are religious
organizations whose tenets would be offended by payments on behalf of
employees into the social security system. Because this is “only the beginning,
however, and not the end of the inquiry,” id. at 257, the next issue is whether
there is a compelling governmental interest that will overcome the imposition
on the religious liberty of those individuals who would have conscientious
objections to mandatory coverage by the system. We have little difficulty in
concluding that the courts will find that the same interest at stake in Lee was
implicated in passage of § 102. Congress, in discussing § 102, emphasized
both its concern that employees of non-profit organizations not “forfeit the
advantages of a nearly universal social insurance system,” H.R. Rep. No. 25,
supra, at 16, and the need to protect the solvency of the system by spreading the
coverage as broadly as possible to gain extra revenue. S. Rep. No. 23, 98th
Cong., 1st Sess. 12 (chart detailing revenue gain).8 If the stability of the social
security system and the administrative advantages of universal coverage were
sufficient in 1982 to overcome free exercise rights as the Court determined in
the Lee case, we believe that those interests have, if anything, become stronger
given the broadly based and bipartisan consensus in 1983 that without the Act
the financial soundness of the entire system was in jeopardy.
   Finally, we believe that a court would conclude, as in Lee, that accommoda­
tion of those individuals and organizations with religious objections, while
mandating coverage of others, including religious organizations, with no reli­
gious objection to the social security system, would unduly interfere with
fulfillment of the governmental interest. The Supreme Court recognized that
Congress grants exemptions to various taxing schemes, including the social
security system. In fact, in Lee the Court noted that Congress had provided an
exemption from the system for self employed Amish because of their religious
objections. 26 U.S.C. § 1402(g). The Court stated that this was a reasonable
accommodation,9 but did not draw from this conclusion any rule that Congress
   5 ( . . . continued)
v. Commissioner, 579 F.2d 392 (6th Cir. 1978), cert, denied, 440 U.S. 946 (1979); Winters v. Commissioner,
468 F.2d 778, 781 (2d C ir. 1972), Basic Unit Ministry v. United States, 511 F. Supp. 166, 169(D .D .C . 1981),
a ffd , 670 F.2d 1210 (D.C. C ir. 1982); Varga v. United States, 467 F. Supp. 1113, 1118 (D. Md. 1979), a ff d
mem., 618 F.2d 106 (4th Cir. 1980). Cf. Ward v. Commissioner, 608 F.2d 599 (5th Cir. 1979), cert, denied,
446 U.S. 918 (1980).
   6 Justice Stevens wrote a separate opinion concurring in the judgm ent. Id. at 261.
   7 See also Olsen v. Commissioner, 709 F.2d 278 (4th Cir. 1983) (se lf em ploym ent lax); Victory Baptist
Temple, Inc. v. Industrial Comm'n, 422 N.E.2d 819, 2 O hio App. 3d 418 (Ct. App.) (w orkm en’s com pensa­
tion), cert, denied, 459 U.S. 1086 (1982).
   8 M oreover, § 102 is located in Title I o f the Act which is entitled "Provisions A ffecting the Financing of
the Social Security System.” 97 Stat. 65. C ongress’ o v em d in g interest in expanding coverage, such as by
including em ployees o f nonprofit groups and new federal em ployees and by preventing term inations by State
and local governm ents, to new sources o f revenue in o rder to shore up the system is evident in all three
reports. H.R. Rep. No. 47, 98th Cong., 1st Sess. 118-19 (1983); S. Rep. No. 23, 98th Cong., 1st Sess. 1, 12
(1983); H.R. Rep. No. 25, Part I, 98th Cong., 1st Sess. 3, 13 (1983).
   9 “C onfining the § 1402(g) exem ption to the self em ployed provided for a narrow category which was
readily identifiable.” United States v. Lee, 455 U.S. at 261.

                                                      27
was compelled to extend the exemption to all other Amish. Rather, the Court
concluded the opinion by saying:
       Congress and the courts have been sensitive to the needs flow­
       ing from the Free Exercise Clause, but every person cannot be
       shielded from all the burdens incident to exercising every aspect
       of the right to practice religious beliefs. Granting an exemption
       from social security taxes to an employer operates to impose the
       employer’s religious faith on the employees . . . . The tax
       imposed on employers to support the social security system
       must be uniformly applicable to all, except as Congress provides
       explicitly otherwise.
455 U.S. at 261. Because of the government’s overwhelming interest in a social
security system which is as uniform as possible, the Free Exercise Clause does
not prohibit the non-discriminatory application of a standard tax to a religious
organization or its employees. We therefore believe that the elimination by
§ 102 of the exemption for non-profit organizations, including religious ones,
is permissible even if it does offend the religious convictions of some who will
be required to participate.

                          III. Establishment Clause

   The Constitution also provides that “Congress shall make no law respecting
an establishment of religion.” U.S. Const, amend. I, § 1. Section 102 has been
attacked on the grounds that compelling the participation of churches will
inevitably entangle the government in the affairs of the churches, thereby
violating the Establishment Clause.
   Whether a statute violates the Establishment Clause is frequently analyzed
under the three-part test articulated in Lemon v. Kurtzman, 403 U.S. 602, 612—
13 (1971). First, the challenged statute must have a secular purpose. Section
102 has at least two bona f id e secular purposes: providing income security for
workers and their families by insuring that they are protected by the social
security system and providing money to the underfunded system’s trust funds.
Second, the primary effect o f the challenged statute must be one that neither
advances nor inhibits a particular religion. The Social Security tax’s primary
purpose raising revenue does not inhibit religion. Cf. United States v. Lee, 455
U.S. 252, 263 (1982) (Stevens, J., concurring) (concluding that “there is
virtually no room for a ‘constitutionally required exemption’ on religious
grounds from a valid tax law that is entirely neutral in its general application”).
   Third, the statute must not foster excessive government entanglement with
religion. Excessive entanglement involves some of the principal evils at which
the Establishment Clause was aimed: government sponsorship, financial sup­
port or active involvement by the sovereign in a religion. Lemon v. Kurtzman,
403 U.S. at 612. For example, in Lemon the Supreme Court struck down a
statute providing reimbursement to parochial schools for the salaries of teach­
                                       28
ers who taught non religious subjects. The Court held that the very effort by the
state to ensure that the money was properly spent would require a degree of
oversight and surveillance that would entangle the government. Id. at 619-20.
The churches would no longer be the exclusive judges of the teachers’ conduct.
Thus, courts must examine whether enforcement of the law will impinge on the
church’s substantive decisionmaking power or intrude on questions of church
doctrine.
   We do not believe that the mere transmission to the government of money
for social security taxes will involve excessive entanglement of the churches
and the federal government.10Churches must presently pay some federal taxes,
such as excise taxes on telephones and income taxes on unrelated business
income. Moreover, they already are obligated to withhold income taxes from
their employees. See Eighth Street Baptist Church, Inc. v. United States, 295 F.
Supp. 1400 (D. Kan. 1969), a ffd , 431 F.2d 1193 (10th Cir. 1970) (per curiam).
We are not aware of any case successfully challenging this essentially adminis­
trative duty as excessively entangling for the churches. The Act will not force
the churches to share their decisionmaking power: they are free to allocate their
resources as they see fit after they pay their taxes. Because it is permissible for
Congress to impose non-discriminatory and uniform taxes on churches on the
same basis as other entities and since churches already are required to withhold
income taxes for their lay employees, we do not believe that requiring churches
to pay the employer’s portion of applicable social security taxes or to withhold
the employee’s portion violates the Establishment Clause.11

                                                 Conclusion

  Section 102 of the Act violates neither the Free Exercise Clause nor the
Establishment Clause of the First Amendment. We will be glad to discuss this
matter with you if you have any further questions.

                                                                     T h eo d o r e B. O lso n
                                                                A ssistant Attorney General
                                                                  Office o f Legal Counsel




  10 Walz v. Tax Comm 'n, 397 U.S. 664 (1970), is not to the contrary. In Walz, the Court upheld a state’s tax
exem ption for church property against an Establishm ent C lause challenge. The Court pointed out that
rem oving the tax exem ption m ight lead to more church entanglem ent with the governm ent since liens,
foreclosures and law suits w ould arise if the property were taxed. 397 U.S. at 674. A lthough som e com m enta­
tors have argued that this m eans that exem ptions are constitutionally required, see Note, Tax Exemptions,
Subsidies and Religious Freedom After Walz v. Tax Commission, 45 N.Y.U. L. Rev. 876 (1970), the Supreme
C ourt’s summary distinguishing o f the exem ption for self-em ployed Amish in United States v. Lee , 455 U.S.
252, 261 (1982), lends little credence to this argum ent. Rather, Walz should be read for the proposition that
tax exem ptions them selves are not unconstitutional.
  11 It is also instructive that over the years a large num ber o f churches have opted into the system voluntarily,
see supra note 1, w ithout any evidence o f im perm issible entanglem ent.

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