Those tax breaks for segregated schools stir storm

By , Staff correspondent of The Christian Science Monitor

Segregated private schools had better not count on new funds they might collect from winning tax exempt status. Aftershocks of President Reagan's decision to lift Internal Revenue Service (IRS) antidiscrimination rules are still rocking Washington.

Expressions of outrage have touched off action in the White House, the courts , and Capitol Hill.

* Only four days after canceling the IRS rules that forbid tax exemption to schools that discriminate, the President turned around to announce he will back legislation that would serve the same purpose.

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* Civil rights groups went to federal district court in Washington Jan. 13 to try to block the IRS rule change. The Lawyers' Committee on Civil Rights is charging that the move violates court orders dating back to 1971.

* A coalition of Democrats and Republicans has gathered 15 senators who are promising to introduce legislation to deny tax exemption to segregated schools on the opening day of the new congressional session Jan. 25.

Meanwhile, the US Treasury Department has put segregated schools requesting tax exemption ''on hold.'' More than 100 private schools, all in the South, have been denied tax exemption since the IRS imposed antidiscrimination rules in 1970 .

Only two will now have tax exemption, says a Treasury spokesman: Bob Jones University and Goldsboro Christian Schools, Inc., both in South Carolina. The two are part of a Supreme Court case in which the schools claim that they are entitled to tax exemption because their religious faith calls for racial discrimination.

The Reagan administration has asked the high court to drop the Bob Jones case , on grounds that the case is now moot since the IRS has given them tax exemption. However, the action does nothing to aid other schools which claim that freedom of religion gives them the right to discriminate.

Tax exemption can be a major boon to a school because it allows contributors to deduct donations from their income taxes. The IRS set up rules to exclude segregated schools in response to a court case, Green v. Connally, in which civil rights advocates charged that the federal tax laws were subsidizing segregation.

Frank Parker, who argued the Green case for the Lawyers' Committee on Civil Rights, says that the IRS is under court order to deny tax exemption to segregated schools. ''The IRS has never explained how it can revoke the rules and still be in compliance,'' he says, charging that the Reagan administration failed to consider the court's ruling.

Spokesman for the Department of Justice John Wilson countered that the existing court orders apply only to Mississippi, where the complaint originated.

Supporters of President Reagan's actions say that he was aiming at excessive regulations by the IRS, not trying to aid segregationists.

''People are missing the major point,'' says US Rep. Carroll Campbell Jr., (R) of South Carolina. ''The IRS should not be making law by regulation. We've had quite a few abuses by the IRS by regulatory fiat. They have preempted the powers of Congress. It's a broad problem that needs to be addressed.''

Congressman Campbell met with the President before Mr. Reagan announced plans to push for an antidiscrimination tax law to replace the IRS rule. ''I'm going to be very supportive of the legislation,'' he says. ''I think we can get this thing through in very short order.''

The administration bill will go first to the Senate Finance Committee, where it is expected to have speedy consideration.

Republican Sen. Strom Thurmond of South Carolina, while not giving the legislation a rousing endorsement, has backed the idea of going through Congress instead of the IRS. However, Mr. Thurmond cautioned in a statement that any law ''should in no way infringe upon freedom of religious belief and expression'' as in the case of Bob Jones University.

If the Reagan administration succeeds in its strategy to go through Congress, it will avoid a potentially wide-reaching ruling from the Supreme Court on tax exemption. In the meantime, the administration has taken its second major flip-flop in the face of a public outcry.

Last spring the President was forced to back off of major social security cutbacks. Despite the retreat, he is still fighting an image, enhanced by Democrats, that he is against social security.

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