House Republicans are revisiting legislation that would give the Treasury Department powers to revoke nonprofits' tax-exempt status if they are deemed supportive of terrorism, raising concerns about political misuse. Similar laws have been used in Hungary and Russia to target NGOs. Currently, the Biden administration is already using funding threats against universities like Harvard to curb certain expressions, highlighting the real-world threat to civil society and the potential for legislation to weaken checks on political power.
The U.S. Capitol building.
zimmytws/iStock/Getty Images Plus

Sign up for the Slatest to get the most insightful analysis, criticism, and advice out there, delivered to your inbox daily.

The “nonprofit killer” bill is alive again.

House Republicans’ draft budget bill included a clause that would allow President Donald Trump’s Treasury Department to strip the tax-exempt status of any nonprofit it deems a “terrorist-supporting organization.”

If that sounds familiar, it’s because similar legislation came before the House last year (after earlier iterations) as HR 9495, the “Stop Terror-Financing and Tax Penalties on American Hostages Act.” Under that legislation, the treasury secretary could deem any nongovernmental organization to be “terrorist supporting,” and, if the group could not prove that they weren’t in 90 days, they could be designated a terrorist-supporting group and have their tax-exempt status revoked. Defenders of the law will say that this isn’t politically motivated; the NGO would have met the definition of supporting terrorism. Critics, however, note that this language can easily be politically weaponized by, say, a treasury secretary serving an administration interested in executive overreach. (It is, incidentally, already illegal for NGOs to support terrorism; the difference is that we do not, at present, leave it to the treasury secretary to say so.)

Last year, I warned that this legislation could be used by an administration interested in going after civil society by manipulating the language of national security. We could, if we wanted, look across the ocean to see how similar legislation is being used. As it happens, this week, Hungarian Prime Minister Viktor Orbán’s Fidesz party submitted a bill to parliament that would allow the country’s Sovereignty Protection Office to blacklist organizations if they receive foreign funding, should that funding be deemed a threat to national security. In practice, this could include grants from the European Union. Critics have warned that the bill seems similar to a “foreign agent” law passed over a decade ago in Russia that was used to crack down on NGOs.

This year, we do not need to imagine attacks on NGOs generally and their tax-exempt status specifically as a scary hypothetical. It’s currently happening without this legislation. The president has repeatedly, in addition to freezing federal funds, threatened to revoke Harvard’s tax-exempt status for not ceding to demands, including audits of various departments and changes to university hiring practices, by the administration that would curb the institution’s academic freedom. The administration says that these steps are necessary to fight antisemitism; per a new poll conducted by GBAO Strategies, roughly half of American Jews say funding cuts to universities actually increase antisemitism, while 64 percent disagree with the approach taken by the president to curb antisemitism. (Per the same poll, roughly half of American Jews believe the president himself is an antisemite.)