Should Churches Be Taxed? The Debate on Tax Exemptions and Reinvestment

[nanosiborg]

Several problems, most of which have already been pointed out as others have made similar mistakes:

1. Corporate income is not taxed, only profit. So:
2. You can't tax the profit of a non-profit because there is no profit to tax.
3. It is fine to want to tax property, but this is not an inequity with churches since all non-profits have the same tax exemption.

Thanks russ watters. Regarding #2, so you tax the income. Is there a problem there? Regarding #3, I agree that this is not an inequity with churches, but I think that the real estate holdings of non-profits should be taxed in accordance with the local laws that other private property owners are subject to. Just my current opinion which might change as I learn facts and arguments.

 

[russ_watters]

Thanks russ watters. Regarding #2, so you tax the income. Is there a problem there?

Destroying the economy? If a business has no profit, but you tax the income instead, the business loses money and has to shut down.

 

[nanosiborg]

Destroying the economy? If a business has no profit, but you tax the income instead, the business loses money and has to shut down.

Ok. Point taken.

I'll just say that I agree with Jack21222's views on this.

 

[mgrwlondon]

I don't think that the church should be tax. For, church are composes of people with different status in life and mostly have been paying tax in the government. And if church should tax, who do you think will shoulder in paying it?

 

[Hlafordlaes]

Point of order on the nomenclature. In accounting terms, business income is profit. It is revenue (monies in) that is not taxed; that would ignore costs.

As for taxing religious organizations, we'd need to re-think a few things, such as when monies are donated by the organization to a third party. Cost, or charitable gift that reduces tax liabilities directly? At any rate, I think at least all businesses and properties owned by religious organizations should be taxed, else the government is in effect aiding in establishing religion.

 

[Oltz]

Point of order on the nomenclature. In accounting terms, business income is profit. It is revenue (monies in) that is not taxed; that would ignore costs.

As for taxing religious organizations, we'd need to re-think a few things, such as when monies are donated by the organization to a third party. Cost, or charitable gift that reduces tax liabilities directly? At any rate, I think at least all businesses and properties owned by religious organizations should be taxed, else the government is in effect aiding in establishing religion.

The inverse could also be said if they start taxing the things you mention more then they already are they would be inhibiting the establishment of new religion and pushing struggling ones out of existence.

 

[willbell]

If it can be shown that in any way a church or any of its branches is supporting a politician through advocacy, I think it is reason for them to be taxed. Perhaps if it can be shown they are making big profits (say more than a $1000000 a year), then they should be taxed the same as a business.

 

[BobG]

If it can be shown that in any way a church or any of its branches is supporting a politician through advocacy, I think it is reason for them to be taxed. Perhaps if it can be shown they are making big profits (say more than a $1000000 a year), then they should be taxed the same as a business.

If a church is preaching "prosperity theology", such as some televangelists like Oral Roberts and others, are they really non-profit organizations?

That's still not a reason to tax all churches. The IRS does do a fair job of sorting out the real churches and the scam tax shelters, but the line gets drawn somewhere and those barely on the right side of the line sometimes seem more like scams than real religions.

 

[willbell]

That's still not a reason to tax all churches. The IRS does do a fair job of sorting out the real churches and the scam tax shelters, but the line gets drawn somewhere and those barely on the right side of the line sometimes seem more like scams than real religions.

I didn't say I wanted to tax all churches, I said I wanted to tax them:

If it can be shown that in any way a church or any of its branches is supporting a politician through advocacy, I think it is reason for them to be taxed. Perhaps if it can be shown they are making big profits (say more than a $1000000 a year), then they should be taxed the same as a business.

I believe this would be broader than the current definition but I didn't say all churches.

 

[russ_watters]

I wonder how many churches even could turn a profit of a million dollars a year? And again, how do you find profit in a non-profit? By definition, there is no profit!

 

[willbell]

I wonder how many churches even could turn a profit of a million dollars a year? And again, how do you find profit in a non-profit? By definition, there is no profit!

You would be surprised, megachurches are growing everywhere in the US and elsewhere. And they are only non-profit by the virtue that they are a church, even if the church happens to be filthy rich its still non-profit, Scientology is a church but they are most decidedly not non-profit even if they take their corporate social responsibility more seriously. They still have revenue and it will show up in their income statement.

 

[Windowmaker]

Taxing the church? Are you guys for real? Lol.

 

[thoughtgaze]

a thousand times, yes they should be taxed

 

[Tosh5457]

What do you mean by church? Don't you mean religious organizations? Tax jewish sinagogues and muslim mosques too, at least AFAIK Christians are much more charitable than those.

 

[Evo]

This thread is about taxing church profits. Disparaging remarks about groups of people will not be tolerated, and have been deleted.

 

[cabraham]

I agree that church income and property should be taxed. I think that all so called nonprofit organizations' incomes and real estate holdings should be taxed. The ideal of equality requires it.

By not taxing them in these ways we are giving them a preference which is at odds with our avowed egalitarian ideals and the doctrine of separation of church and state.

Religious organizations simply cannot be given any special consideration or respect in a society that, supposedly, values freedom of thought, expression, and action.

"Egalitarianism"? Since when is that "our goal"? You claim "separation of church and state" yet you want state hands in the church collection basket. If a church makes a profit, like capital gains, it is currently taxed.
Egalitarianism is anti-liberty. People have differing levels of talent and willingness to work. Egalitarianism punishes work and rewards laziness. The church must remain independent and unhampered. As far their preaching things counter to your beliefs, that is their job. A church which conforms to public opinion is worthless. Who needs them?

Also, AFL-CIO, Sierra Club, ACLU, etc. are non-profit organizations, NPO, which are tax exempt, like religious orgs. Church taxing advocates don't seem to be bothered by the fact these secular NPOs are tax-exempt. These activists say the church not being taxed puts the burden of supporting govt on the shoulders of everyone else unfairly, but they are ok w/ secular groups like the above mentioned having tax exempt status. Double standard.

FWIW, exempting all NPO, secular or religious, does not put any burden on society. Unless one believes that private property is bad, and all funds should belong to the govt. That is communism.

Claude

 

[Evo]

The church must remain independent and unhampered.

Why?

Perhaps it is time to remove tax exempt status for churches except and ONLY except for what would be considered necessary for charitable work, all else should be taxed, IMO.

 

[cabraham]

Why?

Perhaps it is time to remove tax exempt status for churches except and ONLY except for what would be considered necessary for charitable work, all else should be taxed, IMO.

Because you say so? Since when do you decide what is "necessary for charitible work"? Do you believe AFL-CIO, Sierra Club, ACLU, etc. should be taxed? They fall under the same NPO criteria as the church. If church money is subject to taxation, why not all NPO? Your targeting churches is arbitrary, prejudiced, & discriminatory.

What you are saying is that for an organization to maintain independence & act in an unhampered fashion, they must justify their activities to YOU. What if your speech on these forums had to be justified as meeting some noble agenda or else you be taxed on your speech? Think about what you are saying. You wish to silence your political opponents with taxing power.

The 1819 Supreme Court decision "McCollough vs. Maryland" summed it up best with "The power to tax involves the power to destroy". That is the ultimate aim here.

Claude

 

[russ_watters]

Why?

Perhaps it is time to remove tax exempt status for churches except and ONLY except for what would be considered necessary for charitable work, all else should be taxed, IMO.

That would be religious discrimination, treating religious organizations differently from other non-profits because of their beliefs.

Here's a court case the Boy Scouts won against Philadelphia on a similar basis. The city didn't agree with the BSA stance on gay rights and sought to change the terms of a rent deal because of it: http://en.m.wikipedia.org/wiki/Cradle_of_Liberty_Council_v._City_of_Philadelphia

 

[willbell]

That would be religious discrimination, treating religious organizations differently from other non-profits because of their beliefs.

Here's a court case the Boy Scouts won against Philadelphia on a similar basis. The city didn't agree with the BSA stance on gay rights and sought to change the terms of a rent deal because of it: http://en.m.wikipedia.org/wiki/Cradle_of_Liberty_Council_v._City_of_Philadelphia

If they are doing any political lobbying (not saying the BSA were...) they should be taxed, if they are producing enormous revenues that far exceed their benevolent actions they should be taxed just as I said before.

 

[Permanence]

Definitely not in the United States. If we are to adhere to the current legal system, it would be highly illegal and virulent to the foundation to tax the Church.

As Chief Justice John Marshall declared in McCulloch v. Maryland (1819), "the power to tax involves the power to destroy".

 

[Evo]

That would be religious discrimination, treating religious organizations differently from other non-profits because of their beliefs.

Why do churches deserve tax exempt status except for reasonable expenses related to the charitible work they do? What else do they do that warrants a tax exempt status?

I'm linking to a point counterpoint article, I'm linking to the counterpoint.

Tax exemption is a privilege, not a right
Counterpoint: Barry W. Lynn

Second, you seem to believe that the Constitution somehow mandates that all religious institutions be tax exempt, even though the Constitution says no such thing.

When any group accepts a tax exemption, it agrees to play by certain rules and accept a certain degree of oversight. Federal law actually makes it more difficult for the IRS to audit churches than other charities. In addition to this modest "no electioneering" rule, for example, tax-exempt groups cannot collect money for a "charitable" purpose and then use it all for the personal benefit of the director and her family (or the pastor and his family). Do you seriously believe that the IRS and possibly even criminal investigative bodies have no right to try to scrutinize possible misbehavior?

Second, government at the local, state and federal level made a decision early in our history to grant tax exemptions to churches and other bodies. The Constitution does not mandate it; and indeed, even the decision you cite -- the Walz case -- doesn't say that tax exemptions are required by the 1st Amendment. In general, governments believed that churches along with other types of community groups enhanced and supplemented government services such as feeding the hungry, housing those in need of shelter and in general using private funds for public good. (Although this is a debate for another time, I note that more and more religious groups are now asking for a government bailout through the "faith-based initiative" and to keep their tax exemptions.)

http://www.latimes.com/la-oew-lynn-stanley23-2008sep23,0,4272340.story

 

[cabraham]

Why do churches deserve tax exempt status except for reasonable expenses related to the charitible work they do? What else do they do that warrants a tax exempt status?

I'm linking to a point counterpoint article, I'm linking to the counterpoint.
http://www.latimes.com/la-oew-lynn-stanley23-2008sep23,0,4272340.story

You present a "counterpoint" from none other than Barry Lynn, who is the enemy of free operation of churches. Barry has no problem with ACLU, planned parenthood, etc. operating freely w/o any taxation at all. Why isn't he giving the secular groups who oppose the Church while retaining tax exempt status the same third degree?

BL wants what many people want, a society where only their views are propagated, while opposition is either suppressed, or at minimum discouraged, minimized, or villified. The McCollough vs. Maryland Supreme Court decision from 1819 was not a church case, but the justices set the legal precedent that power to tax involves power to destroy. This statement covers a broad range of cases.

Whenever a group like AUFSCS, ACLU, Sierra Club, etc. actively campaigns to remove an institutions tax exemption while fully enjoying the same, that is pure double standard. People like Lynn do not want fairness, they want the opposition wiped out. It may come to that. A pluralistic society is not what church taxers want.

For the record, I believe that any NPO, secular or faith based, should only be taxed on capital gains, not on operating funds. My system allows all groups, secular or faith, to operate freely unhampered, whether I agree with them or not.
Govt has trillions, while budget for missionaries is a pittance. I estimate the mission budget at 0.001% of the public health, education, & welfare budgets. Now the activists want to transfer a portion of the tiny mission budget to the Goliath public treasury. This is pure unmitigated gall.

Claude

 

[russ_watters]

...if they are producing enormous revenues that far exceed their benevolent actions they should be taxed just as I said before.

As I said before, business revenue isn't taxed. Only profit. So this requirement would be even worse discrimination, taxing churches more than even for-profit businesses!

If they are doing any political lobbying (not saying the BSA were...) they should be taxed

That's a problematic one to me. Why are labor unions allowed to have a political voice (or any other non-profit political organization, for that matter!?), but churches aren't? That seems discriminatory to me too. I'd like to see that part of the law challenged.

 

[russ_watters]

Why do churches deserve tax exempt status except for reasonable expenses related to the charitible work they do? What else do they do that warrants a tax exempt status?

Not have a profit. Be a civic organization.

Why should a labor union be tax exempt? Why should any non-profit be tax exempt? I don't know, but I do know that what's good for the goose must be good for the gander otherwise it is discriminatory.

 

[Evo]

Not have a profit. Be a civic organization.

Why should a labor union be tax exempt? Why should any non-profit be tax exempt? I don't know, but I do know that what's good for the goose must be good for the gander otherwise it is discriminatory.

I certainly don't think a labor union should be tax exempt, doesn't even make sense. I can see a tax break for organizations that help the public with services that would otherwise fall on the tax payers. Charity hospitals, homeless shelters, animal shelters. Unions? WTH? HELL NO. IMO.

Tax exemption to build multi-million dollar cathedrals? NO, IMO. The new Catholic church near here, cost $6 million, tax free. Now, tell me why any of that money should have been tax free. There is no associated charity, they are giving nothing back to the public, they should be taxed on it, IMO. Now if they turn that into a marble floored and pillared homeless shelter and soup kitchen, I might see it.

There are many deserving charities operating on a shoestring budget that do a great deal of public service, now THOSE I support being tax exempt.

 

[willbell]

As I said before, business revenue isn't taxed. Only profit. So this requirement would be even worse discrimination, taxing churches more than even for-profit businesses! That's a problematic one to me. Why are labor unions allowed to have a political voice (or any other non-profit political organization, for that matter!?), but churches aren't? That seems discriminatory to me too. I'd like to see that part of the law challenged.

I would consider unions and lobbying groups like the NRA being taxed a step forward for the USA.
I am confusing revenue and profit, sorry if this seems like a stupid mistake, but considering that there is churches that have millions of dollars salaries for their preachers I think something has to change somewhere in the system.

 

[Tosh5457]

This thread is about taxing church profits. Disparaging remarks about groups of people will not be tolerated, and have been deleted.

I find it ridiculous and discriminatory that everyone is arguing whether the church should be taxed or not, while leaving other religious organizations out of the debate.

 

[Czcibor]

I would consider unions and lobbying groups like the NRA being taxed a step forward for the USA.
I am confusing revenue and profit, sorry if this seems like a stupid mistake, but considering that there is churches that have millions of dollars salaries for their preachers I think something has to change somewhere in the system.

Technical question (I wouldn't pretend that I know US tax system):

Are those salaries taxed as personal income of those preachers?

Evo:
But you know, if we treat a church as profit oriented organization, then we should recognize the mentioned cathedral as fixed asset that should be subject to depreciation, shouldn't we? (we would allow for a company to claim depreciation on their main office or retail store)

 

[russ_watters]

Yes, personal income is taxed, even if it comes from a nonprofit.

I'm trying to come up with logic for tax exempt status... My thought is that while a for-profit business's one and only purpose is profit, a nonprofit exists for some civic benefit reason, so the government tries to encourage that...without passing judgement on the particular goal.

 

[cabraham]

I certainly don't think a labor union should be tax exempt, doesn't even make sense. I can see a tax break for organizations that help the public with services that would otherwise fall on the tax payers. Charity hospitals, homeless shelters, animal shelters. Unions? WTH? HELL NO. IMO.

Tax exemption to build multi-million dollar cathedrals? NO, IMO. The new Catholic church near here, cost $6 million, tax free. Now, tell me why any of that money should have been tax free. There is no associated charity, they are giving nothing back to the public, they should be taxed on it, IMO. Now if they turn that into a marble floored and pillared homeless shelter and soup kitchen, I might see it.

There are many deserving charities operating on a shoestring budget that do a great deal of public service, now THOSE I support being tax exempt.

So they build a cathedral. Big deal. The preacher's salary is taxed, as are the salaries of all church employees. Homeless shelter & soup kitchen? Those are good things as well, but Evo you do not decide what is a good endeavor vs. a bad one. Preaching the word does help people as does a shelter or kitchen. I can't go into details about why preaching is good but let it suffice to say that many people find comfort, solace, strength, & encouragement from sermons, prayer, & theological instruction.

Every construction worker who built the cathedral paid taxes, and all the materials were taxed. It seems to me that you never feel that taxes are high enough. Everything everybody earns is taxed, all they buy is taxed, every item they buy results in the vendor being taxed on profit, etc. The state & federal govts make a lot of revenue on a cathedral construction.

You feel that the cathedral does not generate enough revenue, but i ask the following. Sports stadiums/domes/arenas cost hundreds of millions, close to a billion. Not only do they get tax abatement, but most of the time the taxpayers foot the bill for the whole project. What do they produce? Cleveland Browns Stadium hosts 8 regular season football games & never hosted a playoff in 14 seasons of existence. Seriously, do you wish to force the NFL (& other sports leagues) to fund their own arenas?

Since sports is a for profit operation, I believe they should pay taxes on their capital gains, and that arenas are to be privately funded. Every small business (dry cleaner, nail salon, restaurant, etc.) and big business (Mobil, GE, Dell) must build their own labs, office buildings, etc. You allow pro sports to not only get tax abatement, but allow their arenas to be built w/ taxpayer money.

Yet when members of a church build a cathedral w/ their own funds, you complain it isn't taxed. If the church collects $2M, then spends $1.5M on the cathedral, then gives away the balance, there is no gain to be taxed. Is that hard to understand?

But if some funds are invested such as municipal bonds, stock market, T-bills, etc., any capital gains, including interest, are indeed taxed. Does that make you happy? Honestly, the system is fair to all NPO, religious or secular. It is NOT up to me to decide which endeavors are worthy to retain tax exemption, and which are not. Labor unions, Sierra Club, ACLU, all have agendas I usually disagree with, sometimes agree with. Yet I know that if their tax exemption is considering being revoked, I will fight for them to keep it, despite my opposition to their agenda.

I believe in allowing that which I DISagree with to continue by not attempting to stop it or interfere with it. That is the textbook definition of tolerance. Your disagreement with one or more churches is not just cause to revoke their tax status any more than that of groups I differ with such as AFL-CIO/ACLU/Sierra etc.

Claude

 

[Evo]

So they build a cathedral. Big deal.

If they had been taxed properly in the first place, they wouldn't have the extra $6 million to build the place. Tax laws for "non-profits', especially churches, need to be revised. This "taboo" on churches goes back thousands of years, it's time to lift the taboo, IMO to all above.

 

[Evo]

I find it ridiculous and discriminatory that everyone is arguing whether the church should be taxed or not, while leaving other religious organizations out of the debate.

"the church" covers all religious organizations for the purpose of discussion in this thread. What are you trying to say?

 

[Czcibor]

If they had been taxed properly in the first place, they wouldn't have the extra $6 million to build the place. Tax laws for "non-profits', especially churches, need to be revised. This "taboo" on churches goes back thousands of years, it's time to lift the taboo, IMO.

Could they leasing their cathedral? In such a way they would not have to put much money in front and can immediately claim leasing rates as tax deductible cost?

(I base here on typical income tax rules, that I'm used to, if anything contradict US tax rules, please correct me)

Salaries of priests should be then consider as tax deductible cost, right? They should be considered as employees.

(I thought a bit about this case a while ago, but in Polish setting - if we treat church as business, then as long as long as it does not stacks piles of money but spends it on "reasonable business expenditures" like buildings, priests, religious celebration, whatever - it should be able to claim that actual taxable income is tiny)

 

[russ_watters]

If they had been taxed properly in the first place, they wouldn't have the extra $6 million to build the place. Tax laws for "non-profits', especially churches, need to be revised. This "taboo" on churches goes back thousands of years, it's time to lift the taboo, IMO to all above.

Why "especially churches"? Harvard is sitting on a $30 billion endowment. My homeowners association has a hundred thousand in a reserve fund.