Republican tax provision to punish ‘terrorism supporting’ non-profits slammed by critics

Non-profit groups are sounding the alarm over an attempt by Republican lawmakers to insert a provision allowing the government to cancel the tax-exempt status of organizations it deems “terrorist supporting” in a massive bill under negotiation in the House of Representatives.

The provision’s potential inclusion in the spending and taxation legislation that Donald Trump and his allies refer to as “one big, beautiful bill” has sparked fears that the administration will wield it against groups who file lawsuits or organize voters against his policies.

Lia Holland, campaigns and communications director at tech policy non-profit Fight for the Future, described the provision as “a five-alarm fire for non-profits nationwide”.

“Any organization with goals that do not line up with Maga can be destroyed with a wink from Trump to the treasury”, likely those that oppose his policies towards Israel, or advocate for causes like racial justice and the environment, they said.

Trump had made plain his desire for revenge against his enemies, and since taking office has sought to deport foreign students who engaged in pro-Palestinian activism, blacklisted law firms who have worked for his political opponents and backed the arrest of a county judge on charges of obstructing immigration authorities.

“This provision has nothing to do with keeping Americans safe and instead is an attack on free speech, the security of our communities, and the work of non-profit organizations and charities,” said Skye Perryman, president and CEO of Democracy Forward, which has repeatedly taken the White House to court over its policies.

“The Trump-Vance administration’s unprecedented onslaught against Americans’ constitutional rights is unpopular and has failed in court over and over again. This attempt by the president’s allies in Congress should be rejected by any lawmaker who values civil society.”

The legislation is a top priority for Congress’s Republican leaders, who expect to use the budget reconciliation procedure to overcome Democratic opposition in the Senate and enact it on a party line vote, potentially as soon as 4 July.

Many aspects of the bill remain under negotiation in the House, but it is generally expected to implement a range of Trump’s campaign promises, including the extension of tax cuts enacted during his first term, the construction of a wall along the US-Mexico border, and temporary relief from taxation of tips, overtime and car loan interest. To satisfy the president’s demand for stricter border security and the deportation of all undocumented immigrants, it will authorize more funding for agencies like Immigration and Customs Enforcement and the Border Patrol.

The GOP controls the House by a tiny three-vote margin, and considerable disagreements remain among members over aspects of the bill. The House speaker, Mike Johnson, and other top Republicans have proposed offsetting its costs by reducing funding to social safety net programs that pay for food and healthcare for poor and disabled Americans, sparking unease among some of their moderate members.

Republicans representing districts in states with high taxes, such as New York, New Jersey and California, are demanding a bigger deduction for local tax payments, while rightwing fiscal hawks are threatening to vote against the bill if it does not make deep cuts to government spending.

There appears to be little in the way of disagreement in the GOP over the provision targeting non-profits, which is similar to a bill that the House passed last November with a small amount of Democratic support.

But federal law already includes harsh penalties for terrorist organizations and their supporters, including loss of tax-exempt status, and non-profits view the new language as both unnecessary and questionable at a time when the president has made vengeance a priority.

“Allowing the secretary of the treasury to unilaterally designate section 501(c) non-profits as ‘terrorist supporting organizations’ while requiring those organizations to prove their innocence runs counter to constitutional due process,” Independent Sector and the Council on Foundations, both organizations that represent the non-profit sector, said in a statement.

The provision would also give future administrations, of any party, a new tool to use against their own opponents, Holland, of Fight for the Future, warned.

“This is a first amendment issue – no president should have the right to destroy non-profits for no reason,” they said.