What Religious Tax Exemptions Cost Us

What Religious Tax Exemptions Cost Us June 19, 2012

Free Inquiry magazine has an article (PDF) about tax exemptions for churches and other religious organizations and how much revenue it eliminates. The total figure: $71 billion a year. It’s a particular problem at the state and local level because they don’t pay property taxes:

In addition to paying no tax on donations, religious institutions pay no property taxes. The Hartford Seminary estimates that there are 335,000 congregations in the United States. Using forty-seven churches in Tampa from six different religions as our basis (Presby terians, Mormons, Baptists, Methodists, Episcopalians, and Pentecostals), we estimated that the average value of a church in the United States today is about $1.7 million (land and building). Because property taxes are paid at the state level, we averaged the total number of churches across all fifty states, multiplied the estimated number of churches by the average value, and then calculated the lost state revenues. States subsidize religions to the tune of about $26.2 billion per year by not requiring religious institutions to pay property taxes for property worth about $600 billion. This subsidy is of particular interest because property taxes pay for services such as firefighting and police, which religious institutions use the same as corporations and private citizens.

This creates a real revenue problem, especially in large cities where some of the prime real estate is taken up by churches that do not contribute to the revenue base that funds important services that they use as well. For instance:

Another way to illustrate the size of the subsidy may be to illustrate how much tax revenue would increase at the state level if religious institutions had to pay property taxes. In Florida, where the state government’s budget was $69.1 billion in 2011, the amount of tax revenue lost from subsidizing religious property was $2.2 billion or 3 percent of the state budget. The additional revenue would have mostly prevented the $1.1 billion cut to firefighter and police retirement plans and the $1.3 billion cut to public schools.

At a time when state and local governments are in revenue hell and are being forced to cut vital services like fire departments and schools, this is an important issue. In New York City, for example, it is estimated that the city loses more than $600 million a year because churches are tax exempt.


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