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GREEN v. CONNALLY
June 30, 1971
William H. GREEN et al., Plaintiffs,
John B. CONNALLY et al., Defendants, v. Dan COIT et al., Intervenors
Leventhal, Circuit Judge.
The opinion of the court was delivered by: LEVENTHAL
This is a class action by plaintiffs, Negro parents of school children attending public schools in Mississippi, to enjoin U. S. Treasury officials from according tax-exempt status and deductibility of contributions to private schools in Mississippi discriminating against Negro students. Intervenors represent the class of parents and children who support or attend such private schools. After the three-judge District Court granted a preliminary injunction, the Internal Revenue Service (IRS) announced that it would no longer allow tax-exempt status and deductibility of contributions to any private schools in the Nation which practice racial discrimination. The three-judge District Court granted plaintiffs judgment on the merits, both declaratory relief and a permanent injunction. The court held:
I. Under the Internal Revenue Code, properly construed, racially discriminatory private schools are not entitled to the Federal tax exemption provided for charitable, educational institutions, and persons making gifts to such schools are not entitled to the deductions provided in case of gifts to charitable, educational institutions.
A. It is open to serious doubt whether the privileges the common law accords to charitable trusts because of their benefits to the community are still available to trusts establishing racially discriminatory educational institutions in light of (1) the rule that a charitable trust cannot validly be established for accomplishment of a purpose contrary to public policy and (2) case law trends eliminating or vitiating the enforceability of discriminatory provisions in the instruments establishing educational trusts. pp. 5-13.
B. Federal tax exemptions and deductions are generally not available for activities contrary to declared Federal public policy. Specifically the exemptions and deductions provided for charitable, educational institutions are not available for private schools discriminating on ground of race against students, in view of Federal policy against government support for racial segregation of public or private schools, declared in the post-Civil War amendments to the Constitution, the rulings of the Supreme Court and the Civil Rights Act of 1964. (pp. 17-20).
C. This construction of the Code avoids serious constitutional questions, since the Constitution would plainly prohibit direct government grants to schools practicing racial discrimination among students, and tax exemptions and deductions likewise provide support, albeit in the nature of an ...
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