Should all religions in the US be tax-exempt?

[Hurkyl]

The National Organization for Marriage ...

Your beef with political action committees belong in another thread where they aren't obscuring what is ostensibly the topic of this thread -- tax-exemption as it relates to religious groups.

 

[turbo]

Your beef with political action committees belong in another thread where they aren't obscuring what is ostensibly the topic of this thread -- tax-exemption as it relates to religious groups.

Please feel free to move the post or delete the reference to NOM if you wish. My point is that the church provided manpower and cash (about 1/2 million dollars) to get proposition 1 on the ballot and they were aided by some very wealthy out-of-state donors. It appears that the church was acting as a PAC, in violation of the IRS rules regarding tax-exempt status.

 

[turbo]

I dug around archived materials for a bit, and have found that as of 2007, 35% of the property in the city of Waterville, ME was tax-exempt. My wife and I would have liked to live there at one point, but the property tax rate was excessive. That 35% is not all owned by religious groups. There are two well-heeled private colleges and 3 hospitals in that city, as well as some parochial schools.

 

[Hurkyl]

Really, I think I'm totally confused as to what your point is.

Let me ask a specific question: do you have any objection to a religious group being tax-exempt if they adhere to the bullet points I quoted?

If not, then I think the topic is settled?

 

[turbo]

Really, I think I'm totally confused as to what your point is.

Let me ask a specific question: do you have any objection to a religious group being tax-exempt if they adhere to the bullet points I quoted?

No.

But as I have tried to show, the church funneled money into a political campaign against same-sex marriage and organized the faithful to collect petition signatures for the purpose of overturning a law passed by the legislature and signed into law by the governor (who is himself Catholic, BTW). That level of political activism is specifically banned in the list of bullet-points you posted. I bolded the two points that were most relevant to the discussion.

 

[turbo]

At some point, I think we have to re-think the granting of tax-exempt status to religious groups that engage in political activism. Tax-exemptions for religious groups doesn't logically flow from the separation of church and state, IMO. The Prop 1 campaign of 2008 was just one glaring example of why some groups may not deserve tax exemptions.

 

[Evo]

I don't mind if the charitable functions of a religious group are tax exempt, but I see no reason why a religious organization should be tax exempt.

Some religious groups do great charitable work. Many do not do anything charitable or even help in their local community. Why, exactly, should these people be tax exempt? I think it's time to stop the blanket tax protection for anyone that calls themself a religion. It's ridiculous how easy it is to proclaim yourself a religious organization.

I'm a bit bummed, my scapular says "made in China", my best friend bought it for me at her catholic church. A bit off topic, I found it while unpacking some boxes from my recent move. Why are they outsourcing the manufacture of Christian religious objects to China of all places? I doubt the factory is Christian.

Surely the church could have opened a little workshop for some local handicapped or homeless people to print these up?

 

[Hurkyl]

I bolded the two points that were most relevant to the discussion.

If the bullet points are violated (and there is not some further relevant law), then they shouldn't get tax-exempt status. Case closed.

It's confusing to me that you seem to be putting a lot of effort into arguing that tax-exempt status should not be granted to organizations that the law says should not be granted tax-exempt status. And that you are trying to turn it into an issue about religion.

 

[turbo]

Let me ask you if you feel that the Westboro Baptist Church deserves tax-exempt status.

 

[Hurkyl]

I have no idea.

Is it worth thinking about? I don't see why, if you're content with the laws that dictate whether or not an organization can have tax-exempt status.

 

[Hurkyl]

Well, turns out I'm up for a brief round of devil's advocate.

Their campaigns seem to target public opinion, spread the word, that sort of thing. So unless their message happens to fall in the realm where we the Government is allowed to legislate religious content, they start undertaking illegal activities, or they start operating for profit, then yes, they should enjoy a tax-exempt status.

 

[Gokul43201]

depending on the major...

And can one not similarly say " ...depending on the church, and depending on the nature of the specific services it provides ..."?

 

[Gokul43201]

Well, turns out I'm up for a brief round of devil's advocate.

Their campaigns seem to target public opinion, spread the word, that sort of thing. So unless their message happens to fall in the realm where we the Government is allowed to legislate religious content, they start undertaking illegal activities, or they start operating for profit, then yes, they should enjoy a tax-exempt status.

I agree. To the extent that any church deserves tax-exempt status, so does Westboro Baptist. So also, would any extremist madrasa that is careful about how it walks the legal line (by knowing and sticking within its amendment limitations).

 

[ThomasT]

Should they all be exempt from taxation?

No, they should all have to pay property, etc. taxes.

 

[turbo]

No, they should all have to pay property, etc. taxes.

My feeling, too. If an organization is a charitable enterprise, they can take a load off public services, and they deserve to be tax-exempt. I certainly don't think that the Salvation Army needs to be taxed because they do so much good, and they target their efforts locally, using volunteers, as much as possible.

Most churches do very little in this regard, apart from tag sales, etc. Why should they get a free ride? Local churches funnel money to their franchises, and the mega-churches make their pastors into millionaires with no accountability.

When you have large enterprises taking cash income and funneling it into unaccountable accounts, that is generally considered money-laundering by the Feds. Pull away the inviolable blanket of "faith" attributed to churches in the US, and there is a large underground economy that needs some attention.

 

[vela]

I think this claim that churches should have to earn their tax-exempt status by doing good for the local community is a red herring. The reason for the tax exemption is to keep the government from promoting some religions over others via the tax code.

Frankly, I'd rather put up with the abuses of some churches than giving Congress the power to tax churches. I can only imagine what kinds of taxes would have been passed after 9/11 targeting Muslims if Congress had that power.

 

[CRGreathouse]

I think this claim that churches should have to earn their tax-exempt status by doing good for the local community is a red herring. The reason for the tax exemption is to keep the government from promoting some religions over others via the tax code.

Fair enough. But there's also reason to be concerned about the power of, e.g., the Church of Scientology over local governments, which seems to cut in the other direction. Thoughts?

I'm primarily interested in arguments of what is *right* or *desirable* rather than what might or might not be allowable under a particular interpretation of the legal system as it stands now.

 

[Gokul43201]

The reason for the tax exemption is to keep the government from promoting some religions over others via the tax code.

Is that really the reason? I hadn't heard that argument before. I always thought the argument was one along the lines of promoting the common good.

Frankly, I'd rather put up with the abuses of some churches than giving Congress the power to tax churches. I can only imagine what kinds of taxes would have been passed after 9/11 targeting Muslims if Congress had that power.

I see it being an obvious violation of the Separation clause if some religious organizations were taxed at different rates than others, and therefore can't imagine it would have any hope of surviving judicial challenge. I don't, therefore - at least not yet - see that making them tax-exempt is a necessary means of protecting Separation (I'm not even convinced it is a sufficient means). But then, maybe I'm just not thinking as creatively as a determined Congressperson (plus staff) might.

 

[turbo]

II see it being an obvious violation of the Separation clause if some religious organizations were taxed at different rates than others, and therefore can't imagine it would have any hope of surviving judicial challenge. I don't, therefore - at least not yet - see that making them tax-exempt is a necessary means of protecting Separation (I'm not even convinced it is a sufficient means).

If one or more of the televangelical empires were targeted, I would expect their tax-exempt status would fall quickly, leading to a bulk review of the tax-statuses of all "religious" non-charitable organizations at higher court levels.

 

[Gokul43201]

If one or more of the televangelical empires were targeted, I would expect their tax-exempt status would fall quickly, leading to a bulk review of the tax-statuses of all "religious" non-charitable organizations at higher court levels.

Ah, I see the merit in that argument. My previous objection, therefore, is withdrawn.

 

[mgb_phys]

If one or more of the televangelical empires were targeted, I would expect their tax-exempt status would fall quickly, leading to a bulk review of the tax-statuses of all "religious" non-charitable organizations at higher court levels.

They still wouldn't pay any tax - just like corporations they would have their headquarters in an offshore tax haven.
Vatican city is hardly likely to charge the catholic church corporation tax!

 

[vela]

Is that really the reason? I hadn't heard that argument before. I always thought the argument was one along the lines of promoting the common good.

Here's a summary of a 1970 Supreme Court ruling about the religious tax exemptions:

http://atheism.about.com/library/decisions/tax/bldec_WalzTaxComm.htm

It looks like there are several reasons recognized for the exemptions: historical, common good, and constitutional.

I see it being an obvious violation of the Separation clause if some religious organizations were taxed at different rates than others, and therefore can't imagine it would have any hope of surviving judicial challenge. I don't, therefore - at least not yet - see that making them tax-exempt is a necessary means of protecting Separation (I'm not even convinced it is a sufficient means). But then, maybe I'm just not thinking as creatively as a determined Congressperson (plus staff) might.

A justification for a blanket exemption is to avoid the possibility of messing with the tax code to tax some religious organizations more than other through non-transparent methods. Obviously, if a law targeted, say, the Catholic church by name, it would quickly be rejected by the courts as violating the First Amendment. On the other hand, the government could achieve the same result by jacking up taxes in regions which just happen to have a large concentration of Catholic churches if churches weren't exempt.

 

[Gokul43201]

Obviously, if a law targeted, say, the Catholic church by name, it would quickly be rejected by the courts as violating the First Amendment. On the other hand, the government could achieve the same result by jacking up taxes in regions which just happen to have a large concentration of Catholic churches if churches weren't exempt.

Agreed. And thanks for the link.

 

[vela]

Fair enough. But there's also reason to be concerned about the power of, e.g., the Church of Scientology over local governments, which seems to cut in the other direction. Thoughts?

I think this is part of the general problem with the influence of any special interest over the local, state, and federal government, but I can certainly understand why people get angry with a church trying to influence elections while not having to play by the same rules as other organizations. I certainly felt that way here in California when Prop. 8 passed largely due to the efforts and backing of the Mormon and Catholic church.

I'm primarily interested in arguments of what is *right* or *desirable* rather than what might or might not be allowable under a particular interpretation of the legal system as it stands now.

 

[loseyourname]

I don't have a problem with their tax-exempt status, but I see no compelling reason that high-earning religious organizations shouldn't have to file public 990s like every other non-profit does. They could then be held to the same anti-wealth hording rules that apply to foundations, and furthermore, it would lend transparency to their transactions, which is the basic principle behind why we make public corporations and governments release GAAP-compliant financial statements at regular intervals. How many people need to be found using churches for money laundering before we end this?

 

[Jack21222]

I don't have a problem with their tax-exempt status, but I see no compelling reason that high-earning religious organizations shouldn't have to file public 990s like every other non-profit does. They could then be held to the same anti-wealth hording rules that apply to foundations, and furthermore, it would lend transparency to their transactions, which is the basic principle behind why we make public corporations and governments release GAAP-compliant financial statements at regular intervals. How many people need to be found using churches for money laundering before we end this?

I agree with this 100%.

 

[ThomasT]

My feeling, too. If an organization is a charitable enterprise, they can take a load off public services, and they deserve to be tax-exempt. I certainly don't think that the Salvation Army needs to be taxed because they do so much good, and they target their efforts locally, using volunteers, as much as possible.

As I said, I think that all landowners (churches, schools, individuals, etc.) should be taxed wrt the same standards. As well as consumers (sales tax). As well as individual incomes (income tax). And yes, the Salvation Army should be subject to the same taxes that any enterprise is subject to. If they want to then spend their net income on helping others, then we can be certain that they're, truly, a charitable organization.

As for the argument that different churches or religious organizations or charitable organizations or private schools might be taxed differently, the answer is to simply tax them all the same, ie., according to the same standards as the rest of us. There's simply no reason, in a society that ostensibly respects all idealistic orientations equally, to give preferential treatment to some orientations and not to others. I'm an atheist. Where's my tax exemption for being an atheist?

 

[CRGreathouse]

I don't have a problem with their tax-exempt status, but I see no compelling reason that high-earning religious organizations shouldn't have to file public 990s like every other non-profit does. They could then be held to the same anti-wealth hording rules that apply to foundations, and furthermore, it would lend transparency to their transactions, which is the basic principle behind why we make public corporations and governments release GAAP-compliant financial statements at regular intervals. How many people need to be found using churches for money laundering before we end this?

You present a compelling argument. Any idea how much of a burden this would be, in terms of gross cost of compliance across US churches? Anyone?

 

[mgb_phys]

You present a compelling argument. Any idea how much of a burden this would be, in terms of gross cost of compliance across US churches? Anyone?

For a poor little one room baptists church supporting it's minister - about as difficult as filling out a regular tax form for a self employed carpenter.
For a mega church with it's own cable TV channel and a fleet of corporate jets - failry high, or at least to the point at which you are paying the accoutnants more than you would pay to the government.

 

[nismaratwork]

Personally I fail to see the need for tax exemption for any religion, beyond the political reality that such organizations have money, clout, and the ability to create a hysterical voting block.

 

[loseyourname]

You present a compelling argument. Any idea how much of a burden this would be, in terms of gross cost of compliance across US churches? Anyone?

Well, that's the reason for the $25,000 annual budget requirement, but generally, smaller non-profits usually have someone that prepares their tax returns for free as an in-kind donation. Often, the corporate treasurer on the Board of Directors is a CPA and is the person who does it. Only a large organization with a large budget and more complicated operations would have the need of contracting out the work to a CPA firm.

I'm not sure how church leadership is organized, for instance, whether they even have boards of directors, but I'm sure they have tax accountants somewhere in the pews who would donate the time if it's a relatively small job.

The problem as I imagine it is, however, isn't necessarily restricted to tax reporting. It's more to do with the general untraceable nature of cash donations. Who is to prove that $1 million in cash came from a local drug dealer rather than from 1,000 tithing churchgoers? Neither comes with a paper trail attached and drug dealers aren't cutting checks from banks you can subpoena records from; they're just donating straight cash to funnel back into legitimate operations so that they can deposit it into a bank.

Still, it's hard to see how some level of additional transparency would hurt. If a church with a small and poor membership suddenly shows huge amounts of cash, it would at least attract attention.

 

[GTank7]

Small churches, yes, megachurches, no.