We should make churches pay taxes. So say two recent articles. Matthew Yglesias of Slate says that tax breaks force citizens to, in effect, fund religions they disagree with. Also, tax breaks don’t improve church productivity, since upgrading the building and other things churches spend money on won’t necessarily save more souls. Also, eliminating the non-profit tax break would allow churches to proclaim their moral convictions more forthrightly and to endorse political candidates, which he thinks is perfectly appropriate.
Then Dylan Matthews of the Washington Post, expressing agreement with Yglesias, counts just how much tax breaks for churches cost the government and, following the assumption that all money belongs to the government so that not taking someone else’s money is an government expense and a giveaway, he concludes that “You give religions more than $82.5 billion per year.”
After the jump: The links and excerpts giving their arguments. Can you answer them? Or are they right?
From Matthew Yglesias, We Should Be Taxing Churches, in Slate:
Let’s tax churches! All of them, in a non-discriminatory way that doesn’t consider faith or creed or level of political engagement. There’s simply no good reason to be giving large tax subsidies to the Church of Scientology or the Diocese of San Diego or Temple Rodef Shalom in Virginia or the John Wesley African Methodist Episcopal Zion church around the corner from me. Whichever faith you think is the one true faith, it’s undeniable that the majority of this church-spending is going to support false doctrines. Under the circumstances, tax subsidies for religion are highly inefficient.
What’s more, even insofar as tax subsidies do target the true faith they’re still a pretty bad idea. The basic problem with subsidized religion is that there’s no reason to believe that religion-related expenditures enhance productivity. When a factory spends more money on plant and equipment then it can produce more goods per worker. But soul-saving doesn’t really work this way. Upgrading a church’s physical plant doesn’t enhance the soul-saving capacity of its clergy. You just get a nicer building or a grander Christmas pageant. There’s nothing wrong with that. When I was young I always enjoyed the Grace Church Christmas pageant. But this is just a kind of private entertainment (comparable to spending money on snacks for your book club—and indeed what are Bible study groups but the original book clubs?) that doesn’t need an implicit subsidiy.
Meanwhile, nobody thinks churches and other religious institutions should silence themselves on the important issues of the day. On the contrary, discussing moral action is at the heart of many religious enterprises. And much moral action plays itself out in the arena of politics. So trying to say that churches should get subsidy when they don’t endorse candidates is de facto a kind of subsidy to religious doctrines whose views happen to lack strong partisan implications. So if your faith says “abortion should be illegal and spending on the poor should be increased and it’s too bad neither candidate supports that” you’re golden, but if your faith says “abortion should be legal and spending on the poor should be increased so good for Barack Obama” suddenly you’re in trouble. That’s perverse. Just make everyone pay taxes.
When people donate to religious groups, it’s tax-deductible. Churches don’t pay property taxes on their land or buildings. When they buy stuff, they don’t pay sales taxes. When they sell stuff at a profit, they don’t pay capital gains tax. If they spend less than they take in, they don’t pay corporate income taxes. Priests, ministers, rabbis and the like get “parsonage exemptions” that let them deduct mortgage payments, rent and other living expenses when they’re doing their income taxes. They also are the only group allowed to opt out of Social Security taxes (and benefits).
Cragun et al estimate the total subsidy at $71 billion. That’s almost certainly a lowball, as they didn’t estimate the cost of a number of subsidies, like local income and property tax exemptions, the sales tax exemption, and — most importantly — the charitable deduction for religious given. Their estimate that religious groups own $600 billion in property is also probably low, since it leaves out property besides actual churches, mosques, etc.
The charitable deduction for all groups cost about $39 billion this year, according to the CBO, and given that 32 percent of those donations are to religious groups, getting rid of it just for them would raise about $12.5 billion. Add that in and you get a religious subsidy of about $83.5 billion.
Of course, these subsidies do more than reduce revenue. Property tax exemptions, in particular, distort real estate construction decisions and allocate more land to religious entities than would otherwise be the case, which drives up rents for everyone else (especially since religious groups tend not to buy property in high-density, skyscraper-style developments and instead get a whole lot of land for themselves).