Teed off about Private Club Discrimination on the Taxpayers' Dime: Tax Exemptions and Other Government Privileges to Discriminatory Private Clubs

Abstract:     
Discrimination by bona fide private clubs is legal. It is a constitutionally protected activity under the First Amendment. In balancing individuals' freedom of association and civil rights laws, Congress specifically exempts private clubs from protections otherwise afforded certain protected classes. But our laws go further than balancing and protecting the associational rights of private club members. Discrimination by private clubs is often subsidized through government authorized tax exemptions. Tax exemptions to private clubs that discriminate on the basis of race, gender, and religion, are at the expense of the very citizens victimized by discrimination: citizens who oppose discrimination, and taxpayers who protest, not on my dime!

Heeding the protests of taxpayers and civil rights groups who do not want discrimination on their dimes, state legislators in some states have enacted statutes disallowing tax benefits to those private clubs that discriminate on the basis of certain protected classifications. However, statutes disallowing tax benefits to discriminatory clubs are often difficult to enforce and administer. Once such a law has been enacted, the following questions arise: First, who will be responsible for determining whether a private club discriminates? And second, what kind of proof should be used to demonstrate that a private club discriminates on the basis of race, gender, or religion and is therefore not entitled to tax exemptions? Should the government bear the burden of proving discrimination, or should the entity claiming the benefit or privilege show that it does not discriminate?

The agency or entity charged with investigating, administering, and adjudicating discrimination claims has the authority to investigate private clubs for the limited purpose of determining whether they qualify for government benefits and privileges. The proof used, should be similar to the proof used in employment and housing discrimination claims. When there is a particularized complaint of discrimination by an individual, the investigation and enforcement should proceed against the members involved in the discriminatory conduct. When there is direct evidence or statistical proof of discrimination, the club itself may be denied government benefits or privileges such as property tax exemptions or liquor licenses. Moreover, if a private club claims tax exemptions and other government privileges, it should bear the burden to demonstrate that it does not discriminate on the basis of race, gender, or religion.

Keywords: civil rights, discrimination, tax, private club, taxpayer

Working Paper Series