Significance: In this case the Supreme Court held that racial discrimination could not be tolerated even when done in the name of religious freedom.
Background: Until 1970 the Internal Revenue Service (IRS) generally gave all private schools tax-exempt status [freedom from paying federal taxes]. In 1970 the agency changed its policy and refused to grant tax exemption to schools that discriminated against students on the basis of race. That same year, the IRS canceled the tax-exempt status of Goldsboro Christian Schools, Inc., because of its discriminatory policy against admitting nonwhite students. Goldsboro based this policy on an interpretation of the Bible. After paying some federal Social Security and unemployment taxes, the schools sued the IRS for a refund, claiming that their right to free exercise of religion had been violated. Upon appeal to the U.S. Supreme Court, this case was argued with a similar one, Bob Jones University v. United States.
Decision: This case was argued on October 12, 1982, and decided on May 24, 1983, by a vote of 8 to 1. Chief Justice Warren Burger spoke for the Court, which ruled in favor of the United States. Justice William Rehnquist dissented. The Court declared that because racial discrimination is against established public policy, schools that practice it are ineligible for tax exemption.
Excerpt from the Opinion of the Court: “The Government has a fundamental, overriding interest in eradicating [eliminating] racial discrimination in education—discrimination that prevailed, with official approval, for the first 165 years of this Nation’s constitutional history. That governmental interest substantially outweighs whatever burden denial of tax benefits places on petitioners’ exercise of their religious beliefs.”
