In the United States of America today, churches and religious groups are treated with enormous sensitivity and deference by politicians and the media, a deference they have not earned. Far too often, the government and society in general bends over backwards to accommodate and encourage religious beliefs even when there is no rational reason why they should do so. The most egregious example of this is the sweeping tax exemptions granted to religion.
It is not just one tax that religious organizations are excused from paying, but an entire constellation of them. Clergy are exempt from federal taxes on housing and can opt out of Social Security and Medicare withholding. Religious employers are generally exempt from federal and state unemployment taxes, and in some states, religious publications are exempt from sales tax. Church benefit and retirement plans do not require the church employer to match its employees’ contributions. Churches are automatically exempted from filing annual public informational reports on their financial status and activities, and donations made to churches are eligible for income tax deductions. And, of course, the two major tax breaks: church groups do not have to pay income tax and do not have to pay taxes on property which they own.
It is time to end this unfair and unjustifiable special treatment. Religion has done nothing to deserve it, and has done much to disqualify itself. There are compelling reasons to tax the churches, and this post will examine them.
Repealing churches’ tax exemption prevents unnecessary and complicated legal tangles. At the moment, the tax-exempt status of a church gives groups a strong incentive to declare themselves to be religious organizations, which inevitably leads to protracted legal battles over whether a given organization is a church or not. (The space alien cult of Scientology‘s multi-year legal battle with the U.S. government to win tax-exempt status is a case in point.) This policy puts the government in the unenviable position of having to set policy on exactly what constitutes a religion.
As part of its tax-exempt status, a recognized church may not endorse candidates from the pulpit. However, it can speak out without restriction on issues, a loophole large enough to drive a truck through, and one which has been exploited to the hilt by church groups of every political faction. Any church leader with an ounce of intelligence can figure out how to use this as a backdoor strategy to make it exceedingly clear which candidate his parishioners are expected to vote for, and again the government is placed in the unenviable situation of examining church leaders’ statements and trying to figure out whether they only concern issues or whether they are about candidates (and if a church leader takes all the same positions on the issues as a candidate, how is this any different from endorsing that candidate directly?). If anything fosters an “excessive entanglement” between church and state, this does.
Eliminating the tax-exempt status of churches would neatly slice these two Gordian knots and solve both of these problems in a single stroke. If churches paid taxes like any other group, there would be no reason for anyone to fight over whether a particular group is “religious enough” to constitute a church or not, and no reason for anyone to affect that status as a tax strategy. And if churches could endorse candidates the ludicrous loophole that currently allows them to do so free of charge would be closed. They are already doing so anyway; they might as well pay taxes for the privilege like everyone else.
Repealing churches’ tax exemption threatens no one’s freedom of religion. If a church sought to rent property from a private owner to conduct religious services but could not afford the rent that the owner was asking, would the church members’ freedom to practice their religion have been destroyed? Obviously not: the freedom to practice religion that is guaranteed by the First Amendment does not mean that a religious group has an absolute right to take any property they want for their own use. Church taxation is the same. If a religious group could not afford to pay taxes on property that they owned, this does not mean that this group has been prevented from practicing its religion; it means that the group must seek out a new location to do so, one which they can afford. In the highly unlikely scenario that a church could not find any property whose taxes they could afford to pay, they would still be free to hold services on public property, such as a park, or in their individual members’ residences. Even in such a case, no one’s freedom of religion has been infringed in any way. The only “right” that is threatened by church taxation is the facetious and imaginary right of a religious group to do anything they want just because they are religious.
Repealing churches’ tax exemption makes sense, given that they are unlike not-for-profit organizations. Churches are fundamentally unlike the other kinds of groups that usually declare not-for-profit status. Charities and educational institutions, for example, serve all people equally. However, churches do not. They are free to discriminate, and do discriminate, against people who do not share their beliefs (this is called the “ministerial exemption”). They can and do discriminate against people for being gay, for being women, for being unmarried, for their age, for having health problems, or for virtually any other reason. (A recent New York Times article, “Where Faith Abides, Employees Have Few Rights“, gives more information on the liberties given to churches that would never be granted to any other employer.) At the very least, these groups should pay taxes if they intend to treat their employees in this way. Even better, this special treatment should end, and they should be held to the same anti-discrimination rules as any other business.
In addition, unlike other tax-exempt entities, churches can and very often do make a substantial profit. A great number of church leaders enjoy wildly expensive and lavish lifestyles. What is so objectionable about asking these incredibly wealthy groups to pay taxes on the money they take in?
Repealing churches’ tax exemption ends their unfair free ride. Most of all, churches should be taxed because it is the right thing to do. There is simply no good reason why churches should be tax-exempt. The common assertion that churches provide a necessary inducement to morality fails to find support in the evidence: multiple studies have found that nonbelievers are at least as moral as religious people, and possibly more so. For example, in The God Delusion, Richard Dawkins discusses a study which found that there was no statistically significant difference between the answers of atheists and the answers of religious people to a variety of moral dilemmas.
Additionally, the tax exemption given to churches harms the rest of us: because they do not pay taxes on the assets they own, all the rest of us must pay higher taxes to make up for that lost revenue. This ought to irk believers enough, knowing that they are paying more because of the vast assets owned by rival churches, but atheists are harmed worst of all. Having no equivalent organizations that are free to raise money and acquire assets with such abandon, we are in effect subsidizing all tax-exempt religious activity, to the tune of millions of dollars per year. (An aside: If, as some apologists say, atheism is a religion, does that mean those apologists would support giving atheist groups the same tax exemption given to churches?) This baseless and unconstitutional discrimination should be ended immediately by taxing the churches.
Church tax exemptions also tilt the playing field and violate the principles of the free market. Allowing churches to buy up as much land as they want, and hold it forever without paying taxes, stifles the ability of other people to make meaningful use of that property in the future and grants churches an unfair advantage when providing social services that compete with other businesses. Even worse, churches are also unfairly exempt from many licensing and regulation requirements that all other types of businesses must comply with. Churches are even exempt from taxes on side assets like parking lots.
There can be no justification for this special treatment. Religious groups have been given a free ride for far too long just because they are religious. If churches want to take part in our society, they should contribute to its upkeep just like everyone else. It is time to tax the churches.