Should Churches Be Taxed?

Every election cycle, we hear stories of evangelical pastors admonishing certain unnamed abortion supporters or some other liberal evil du jour. And this past year, during her husband’s reelection campaign, Michelle Obama implored African-American churchgoers in Nashville to be politically engaged. She was careful to avoid saying things like “vote” and “Democrats.”

Both cases, like many others, were met with calls for removing the offending church’s tax exemption. Sometimes this argument is rooted only in positive law, as the Internal Revenue Code conditions a church’s tax-exempt status on its refraining from political activity. But sometimes a more fundamental argument is made: When a church gets political, it voluntarily mixes church and state and thus forfeits its claims to separation.

(Note that in this post, I use “church” to mean religion in a very general sense. It would describe Zoroastrianism just as well as Roman Catholicism. What I do not mean is the true Church, Christ’s body, or the visible church of publicly professing Christians, though of course these two usages overlap.)

The usual proponents of the “wall of separation” are more worried about protecting government and thus the rest of us from the untoward influence of religion. I guess, to them, this is kind of like one side breaking the truce. If the pastor fires a volley across the DMZ and into the public square, he better be prepared for retaliation in the form of the state getting all up in the church’s business. That’s what states do, after all. This is an unfortunately dominant way of conceiving the relationship between church and state. To the modern mind, there is the government and there are citizens. Other organizations are irrelevant to that relationship. The authority of the state correlates to the obligation of the citizens, and this is the primary means by which society is organized.

The atomized view of society is flat, bearing none of the rich topology of a flourishing civil society. Religion is not a peculiar island of immunity from an otherwise all-encompassing state, though discussion of the First Amendment usually makes it sound that way. Instead, the church is one of many forms of social organization, and the state is another. The state is the repository of force and of legal obligation; the church is the font of charity and spiritual virtue. (Virtue is an intricate concept, and I acknowledge the danger of my shorthand here.) There are lawbreakers and greedy churches—neither fact can invalidate the general scheme. Community consists in much more than just this, but it is useful to understand society as a dynamic interrelation of institutions of which church and state are two.

Given these divergent understandings, it is no wonder that Amelia Thomson-Deveaux describes Pulpit Freedom Sunday as “antagonizing the IRS,” an agency that, as she points out, can’t gets its internal act together enough to even audit such churches. Maybe it’s too busy furiously investigating itself. The point of Pulpit Freedom Sunday’s organizers is that any putative law prohibiting political speech by churches is unconstitutional and therefore not really a law. Aquinas summarized a natural law precept with lex iniusta non est lex; here, an unconstitutional law is no law at all.

The robust view of civil society offers a more satisfactory account of the relationship. The church and the state should honor one another. The church should pray for the land and its rulers. It should obey the law when it can and call the state to righteousness when it cannot. The state must respect the church’s teachings on moral matters, even if it does not endorse or establish them. This is, I submit, a better explanation of the roots of the First Amendment’s religion clauses. There will be no established churches because men’s souls are the church’s affair, and it is repugnant to citizen, minister, and God to compel worship. And the people shall enjoy the free exercise of religion because the church operates in a separate (though nested, to be sure) level of organization in society. Lawyers often understand free exercise and nonestablishment to pull in opposite directions, but understood this way I think they are almost redundant.

In response to Thomson-Deveaux’s article, Matt Yglesias at Slate calls for a generally applicable tax in order to avoid the task of discerning which groups and individuals qualify for exemption and leaving churches free to speak on whatever topics they please. His assumption is that the only legitimate reasons not to tax churches is to promote true doctrine and to increase production. But the state and its rulers (which are, in this case, the sovereign people) may rightly decide to honor the church by declining to confiscate its resources. Citizens render unto Caesar, and they render unto God. Jesus surely meant in that scenario that silver and gold were worldly concerns, but it nevertheless behooves the state not to attempt to mix tithes and offerings with the public fisc.

In the end, Yglesias may still be right. If the church ceases to honor the state and instead adopts an antagonistic stance, it is difficult to see why the state would continue to honor the church. And if the sovereign people understand society atomistically, the idea of tax exemptions for churches begins to look incoherent—of all the interpersonal private transactions over which the state hovers, why are these spared? I prefer, of course, that churches continue to enjoy comprehensive tax exemption while being permitted to speak freely on politics. It is better that the state incidentally honor the church. And yet one can hope that the threat of losing their exempt status causes pastors and parishioners alike to consider the source and meaning of their religious liberty and to recommit themselves to honoring God by honoring the state.

About S. L. Whitesell

Lee studies law at the University of Pennsylvania. He and his wife Joanna live in Philadelphia.

  • R Vogel

    I continually hear from religious friends and family members how the decry the use of their tax dollars for things that are against their faith. Yet those of us who are not religious have to de facto support religion by giving tax exempt status to churches.

  • Badjumbly

    S.L. Whitesell wants the state to honour churches with respect for their morality, tax exemptions, and the right to speak freely on politics. In return, he wants churches to honour the state with prayer, selective obedience of the law, and calls to righteousness. That doesn’t seem to me a fair deal, either from an ‘atomised’ view of society or a ‘richly topological’ one.

  • Sven2547

    If your “church” wants to be a political organization, you need to pay the same entry fee as everyone else.

  • Lee Velheaded

    The church pays taxes. They pay taxes in the sense that all members of the church seeking to get IRS credit for charitable donations to churches pay taxes. The church does not produce goods, or sell services. Therefore there is nothing to tax a church for. The tithes and offerings offered to a church by individuals have already been taxed. So taxing a church is not a tax on the church at all, but a double tax on the income given to the church. Should the government tax an individuals income, only to tax that individuals post taxed income again when a small portion is given as a gift to the church? Of course not.

  • S. L. Whitesell

    That isn’t really inconsistent with my post. But generally we don’t think we have to pay an entry fee to participate in our political system. Something to do with the modern preoccupation with democracy. Just to be clear: you are suggesting that we expand pay-to-play politics?

  • S. L. Whitesell

    Hey, a critic actually read the post before criticizing!

  • kenofken

    It’s not a matter of expanding pay-to-play politics. It’s a matter of transparency and everyone playing by the same rules. The IRS rules and the broad tax exemption for churches derives from a particular social contract. That concept says that we should not tax churches because essentially all of the money they raise and spend is used directly for the spiritual development of its members and for charity to the society at large. The reality of that is highly debatable, as some churches operate vast business empires and spend only token amounts on charity.

    Political lobbying is not evil, but it’s not seen as charitable. It’s a very self-serving business-like activity. We make lobbyists register as such for transparency and the money raised and spent is disclosed. It’s also not tax deductible. Many churches and individual pastors flagrantly violate the intent and sometimes the letter of that law by openly endorsing particular candidates and by funneling many millions of dollars into lobbying efforts. When they do so with tax-free dollars, the rest of us are in effect subsidizing their lobbying.

  • S. L. Whitesell

    1. I don’t think political activity per se should be taxed. The argument here is that the churches are engaged in activity that would otherwise be taxed were they not churches, and that we should unexempt them because they are participating in the political process.

    2. We are generally fine with organizations like the ACLU, teachers unions, and the AMA operating as exempt organizations while undertaking massive lobbying campaigns on “their issues.” Is your view that political activity should always subject you to a higher level of taxation?

  • kenofken

    None of the organizations you mention are allowed to use tax-free funds for their lobbying efforts. The AMA is a professional organization and is not tax exempt in any facet except for the separately incorporated foundations they operate. The ACLU has both 501c3 and 501c4 branches, for advocacy work and lobbying, respectively. The money you donate to the former is tax deductible. The latter is not. Both have to make fairly extensive public disclosures about how they raise and spend the money. Churches have no reporting or accounting requirements or transparency where that is concerned. Union lobbying is also not tax deductible. Only the portion of dues that goes to “regular” union activity is deductible – basically the money that pays the union reps and lawyers to negotiate and enforce contracts.

  • Sven2547

    Expand? No. Just hold everyone to the same rules.
    Why should one PAC be taxed, and another tax-exempt, just because one calls itself a “church”?

  • S. L. Whitesell

    That is helpful information. I obviously didn’t look into it before my last comment and admit my sloppiness. There are two responses, both of which I’m okay with:

    1. We would probably be okay granting wider exemptions for ACLU, AMA, Unions, other nonprofits, on the grounds that we want to encourage their behaviors and not penalize them for being politically active. At least, I would.

    2. If we ARE saying that political activity is per se a taxable event (I’m not; I’m willing to leave even harmful entities like unions untaxed on this ground, see above), then I think churches should be taxed FOR THEIR POLITICAL ACTIVITY. Endorsing a candidate costs nothing; I guess you can tax the 3 minutes of the minister’s salary or something. If the “church” is really just a front for otherwise taxable activity, then we can call shenanigans and tax it. But that’s true whether it’s running a laundromat under its steeple or serving as a lobbying wing for specific interests (again, if lobbying, as political activity, is somehow something we’re determined to tax). And it’s also true of, say, the ACLU’s tax-exempt advocacy wing: if it were really serving as a front for specific taxable activity, we could pierce that veil as well.

  • kenofken

    “The church does not produce goods or sell services.” ………

    Some clearly do, and on a monumental scale:

    http://www.businessweek.com/articles/2012-07-10/how-the-mormons-make-money#p1

    http://www.economist.com/node/21560536

    There is big, big money at play here and virtually no transparency.

  • kenofken

    I see at least two broad issues at play here. One is the global question of “should churches be taxed?” The other is more focused on whether they should have to play by the same rules as everyone else in paying taxes on lobbying money.

    The social compact and laws stemming from it make some fairly reasonable distinctions, I think, in differentiating charitable/altruistic spending from self-interested self advocacy. We don’t tax the latter punitively or additionally. We tax it the way we tax most of the money we make and spend in our lives and businesses. We’re not “penalizing” lobbying any more than we penalize the income we spend on a vacation or hobby or trip to the mall.

    If we get into the business of giving more or most groups exemptions on lobbying, that money has to come from somewhere – higher taxes for the rest of us or, more likely, just piling it on the national debt. Something like $3.5 billion is spent each year in direct lobbying.

  • S. L. Whitesell

    My broader point with this post is that there is a conception of society in which the ecclesiastical activities are valued and honored in collateral ways by the state. The easier and more immediate point is the economic one. And my point on that is that the vast majority of church activity isn’t the sort of thing we’d tax anyway, and that there’s nothing specifically about them yelling about politics that should change that fact. But to the extent they engage in normal commercial activity, especially when the church is a front for something else (like lining a celebrity preacher’s pockets), then taxation is probably appropriate.

  • Katherine Harms

    The tax-exempt status of religion is not a gift to religion. It is a recognition that the role of religion is to be a gadfly, not a supporter. Religions is all about truth, while politics is all about compromise. There needs to be a place for the unvarnished truth, even if it is spoken in a pulpit discourse by a pastor whose message is “Vote Republican.”
    I personally find it repugnant for my pastor to tell me how he wishes I would vote, because I prefer he share with me the spiritual discipline that will enable me to hear the guidance of the Holy Spirit that he hears. Nevertheless, churches must not be entangled with government, not even by being taxed. There are plenty of legitimate sources of tax revenue without taxing the voices that speak messages the government does not want to hear, because the government needs to hear those messages.

  • JoFro

    What if a rich evangelical mega-church decided to pay taxes and got involved in politics, specifically calling on its members to vote for candidates it approved of? Would that be OK?

  • R Vogel

    Of course. They should have the same right to free speech as anyone else, and as the article discussed they are doing this already. I just don’t think they should be allowed to skate on the millions (or billions?) of dollars of tax revenue that the rest of us have to make up. I was raised in a large evangelical church, and they may not have declared their support from the pulpit, but in the more private gatherings it was made very clear who you were expected to support. I even recall at one point the minister said “I don’t just need you to pray, I need you to vote!” This was directly after he basically extolled the right party’s political platform. It would be interesting to see how many ‘mega-churches’ would continue to exist if the support from the members wasn’t a full tax deduction.

    As an aside I think that churches or other religious organizations should still be able to apply for tax-exempt status for their charitable pursuits, subject to the same rules as any other charitable organization. Putting on a show every Sunday is not a charitable pursuit.

  • R Vogel

    There is a conception of society in which ecclesiastical activities are valued, however i was would say that is an antiquated conception. Churches are businesses, beyond their charitable pursuits, selling a variety of intangible products – salvation, prosperity, community (only to mention the positive things). Why should (1) people get a tax deduction for giving to an organization that mainly benefits themselves, and (2) why should the state support those organizations? Especially in the US where a certain strain of religion is by far the most prevalent, so in a sense you could say that the government is supporting one religion, in raw dollars, in preference over all of the others.

  • S. L. Whitesell

    1. This notion that churches are just business is bizarre, but fine. Then pro bono lawyers are “selling legal services” because they collect fees sometimes, and the Society for Human Rights of Science and Secular Utopia is “selling” whatever they do because they ask for promotions. It’s incoherent to me to say that an organization is selling something like human flourishing simply because they think their belief system/practices promote that and maintaining the community isn’t somehow magically free.

    2. And right, as I acknowledged, you may well refuse to value the church. The people can decide that they agree with you. I argue that would be a mistake. Calling my view antiquated is only going to make me more attached to it since when I survey the landscape of modernity I see mostly a wasteland.

  • JoFro

    I agree! And I think if the rules were changed, pretty much every black church in America including the evangelical mega-churches would be the first to be made to pay taxes! And that may also be the reason why such a law may never come to pass – Democrats have too much invested in black churches to get the black vote and the Republicans have too much invested in white evangelical mega-churches to get their vote!


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