While religious organizations have unofficially been the recipients of a tax-exempt status since the founding of the United States, official federal income tax exemption was granted in 1894. Today, in the United States, there are 300,000 religious congregations that pay no tax whatsoever. Which means they pay zero in federal, state, local, income, sales, and property taxes, even though together they own an estimated $600 billion in property. Those in favor of maintaining this tax-exempt status argue “that a tax exemption keeps the government out of church finances and thus upholds the separation of church and state”, but at a time when the United States’ national debt stands at $19.3 trillion or 105% of GDP, it is time that we have all hands on deck and everyone should pay their fair share of utilizing our national resources, without any exception to religious entities. (ProCon.org)
Contrastingly, opponents have argued that religious institutions are non-profit by nature and therefore should not be subject to taxation under 26 U.S. Code § 503, but unlike other charitable organizations, such as hospitals, children’s organizations, and other non-governmental organizations, while churches may do some charity work, their main purpose is religious worship and instruction. (Jackson) Churches should only be entitled to the same tax exemptions as other charitable groups if they are held to the same standards. (26 U.S. Code § 503) One blatant example of a church parading as a charity while making profits is the Mormon Church, who according to a 2012 Secular Humanism report, “spends roughly .7% of its annual income on charity.” (Crayon, Yeager and Vega 39)
By the same token, another commonly used argument in favor of maintaining the status quo on these exemptions is that churches are apolitical. However, in 2014 alone more than 1,800 pastors across the United States took part in what is now known as Pulpit Freedom Sunday. Pulpit Freedom Sunday is an event organized by the Alliance Defending Freedom, which is described on their website as “a legal effort designed to secure the free speech rights of pastors in the pulpit” and “encourages pastors to exercise their constitutionally protected freedom to speak truth into every area of life from the pulpit.”
This is a clear violation of their 501(c)(3) status in which “organizations are restricted in how much political and legislative (lobbying) activities they may conduct.” (IRS) Since their argument is that the United States cannot constitutionally deny them of their First Amendment right to freedom of speech, then they should also not be the recipients of special tax exemptions under the same amendment, which forbids the establishment of religion by the government.
Of no less significance, tax exemptions for churches are a violation of the separation of church and state enshrined in the Establishment Clause of the First Amendment of the US Constitution, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof”. (First Amendment, U.S. Constitution) By providing a financial benefit, by way of a tax-exemption, to religious institutions, this creates an unholy alliance where the government is supporting religions while in turn religious entities have influence over the government.
It was no less than former President John F. Kennedy that so fervently expressed, “I believe in an America where the separation of church and state is absolute, where no Catholic prelate would tell the president (should he be Catholic) how to act, and no Protestant minister would tell his parishioners for whom to vote; where no church or church school is granted any public funds or political preference.” (NPR) As Associate Justice of the US Supreme court, William O. Douglas noted in his dissenting opinion in Walz v. Tax Commission of the City of New York, decided May 4, 1970, “If believers are entitled to public financial support, so are nonbelievers. A believer and nonbeliever under the present law are treated differently because of the articles of their faith… I conclude that this tax exemption is unconstitutional.” (Howard 386)
In reality, there was a time in American history when churches and religious organizations main purpose was to help the less fortunate among us. They offered shelter for the homeless, clothed and fed those who needed it the most, provided childcare, and assisted widows and orphans. Today, however, with the prevalence of mega-churches, mansions and private jets for pastors, the main focus seems to be, in many cases, money. Meanwhile, more than 16 million children in the United States or 22% of all children, live in poverty and more than half a million Americans are homeless. (Wight, Chau, and Aratani) (Johnson)
Too many churches have become corporations, seeking to achieve riches off the backs of the most vulnerable and susceptible in our society. According to a CNN.com article, titled Mega Churches Mean Big Business, “Mega-churches are extra-large churches that can accommodate upwards of 15,000 people and are common among members of the evangelical Christian faith.” In the article, Scott Thumma, a professor of sociology and religion at Hartford Seminary told CNN “the mega-church on average has about $6.5 million in income a year.” At one mega-church, in particular, The Lakewood Church, Pastor Joel Osteen “is in charge of a yearly budget of more than $80 million”, according to the article.
In addition, one 2015 report from the Secular Policy Institute shows that tax-exempt churches cost US taxpayers $71 billion every year. Among the report’s findings: Each year religious groups receive $35.3 billion in federal income tax subsidies and $26.2 billion property tax subsidies. In addition, religious organizations also enjoyed approximately $6.1 billion in state income tax subsidies, along with $1.2 billion of parsonage, and $2.2 billion in the faith-based initiatives subsidy. (Cantrell)
In another poll, 2014’s Pew Religious Landscape survey reported that almost a quarter or “22.8% of the U.S. population is religiously unaffiliated, atheists made up 3.1% and agnostics made up 4% of the U.S. population”. A third report, from the 2014 General Social Survey suggests “21% of Americans had no religion with 3% being atheist and 5% being agnostic”. (Hout, Smith 2)
Uniquely, the federal government has insisted in granting tax exemptions as a privilege, when it should only be a right guaranteed under federal law. This privilege is granted to churches, with the assumption that they always make a positive contribution to society, however, there is no provision for this kind of exemption in the U.S. Constitution. (Lynn, JD) In essence, churches receive special treatment from the IRS beyond what other non-profits receive and such favoritism is unconstitutional. Secular charities are compelled to report their income and financial structure to the IRS using Form 990 (Return of Organization Exempt From Income Tax). Churches, on the other hand, are granted automatic exemption from federal income tax without even having to file a tax return. (IRS)
Consequently, new religions like Scientology, founded in 1954 by an American science fiction author, L. Ron Hubbard, can be created out of thin air. Scientology’s doctrines include a belief in Xenu, a galactic ruler, who 75 million years ago, brought billions of people to Earth, stacked them around volcanoes and blew them up with hydrogen bombs. L. Ron Hubbard, its founder, details the story in a document titled, Operating Thetan Level III, published in 1967, notoriously warning that “R6” was “calculated to kill (by pneumonia etc) anyone who attempts to solve it.” (Scientology Beliefs) With this in mind, what would prevent anyone from creating any religion just for the purpose of obtaining a tax-exempt status? For example, what would impede the Church of the Flying Spaghetti Monster from obtaining such an exemption?
In the final analysis, the taxing of religious institutions has become not only necessary but this can no longer be considered a novel idea. In the rest of the developed world, progressive countries such as Austria, Denmark, Finland, Germany, Iceland, Italy, Spain, Sweden, and some parts of Switzerland already have a “church tax”. In 2013 alone, Germany collected approximately $13.2 billion in revenue from church membership. (Gummer) At this point in our history, while our nation drowns in debt, churches and other religious institutions continue to flout the requirements under their 501(c)(3) tax-exempt status. While religious institutions collectively make billions of dollars in profits, more than 16 million children in the United States or 22% of all children live in poverty and more than half a million Americans are homeless. It is time we asked ourselves, “What would Jesus do?” Instead of asking a quarter of the population, who are not religious, to continue to subsidize religion isn’t it time we started taxing religious institutions in America?
- 26 U.S. Code § 503 – Requirements for exemption, https://www.law.cornell.edu/uscode/text/26/503
- “America’s Changing Religious Landscape”, https://www.pewforum.org/2015/05/12/americas-changing-religious-landscape/
- Cantrell, Deanna. Numbers: 71 Billion Reasons to Tax Religious Organizations. https://secularpolicyinstitute.net/71-billion-reasons-to-tax-religious-organizations/
- Crayon, Ryan T., Yeager, Stephanie and Vega, Desmond. Research Report: How Secular Humanists (and Everyone Else) Subsidize Religion in the United States. https://www.secularhumanism.org/fi/vol_32/4/cragun_32_4.pdf, 2012
- Exemption Requirements – 501(c)(3) Organizations, https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501-c-3-organizations
- “First Amendment”, https://www.law.cornell.edu/constitution/first_amendment
- Gummer, Chase. In Germany, Many Believers Balk at Tweak to Church Tax. https://www.wsj.com/articles/in-germany-many-believers-balk-at-tweak-to-church-tax-1409710540, 2014
- Howard, Vincent K. Constitutional Law: Tax Exemption and Religious Freedom, 1971
- Hout, Michael. Smith, Tom W. Fewer Americans Affiliate with Organized Religions, Belief and Practice Unchanged: Key Findings from the 2014 General Social Survey, 2015
- Jackson, Robert H. US Supreme Court dissenting opinion, Everson v. Board of Education of the Township of Ewing, supreme.justia.com, 1947
- Johnson, Eric M. More than 500,000 people homeless in the United States: report. https://www.reuters.com/article/us-usa-homelessness-idUSKCN0T908720151120, 2015
- Lynn JD, Barry W. “Why Don’t Churches Pay Taxes?: Counterpoint” www.latimes.com, 2008
- “Mega Churches Mean Big Business.” https://www.cnn.com/2010/WORLD/americas/01/21/religion.mega.church.christian/, 2010
- Moran, Lee. Bill Maher Breaks Down Why All Religious Institutions Should Be Properly Taxed. https://www.huffingtonpost.com/entry/bill-maher-church-tax-religion_us_5711dd19e4b0018f9cba30a7, 2016
- “Scientology Beliefs.” ReligionFacts.com. https://www.religionfacts.com/scientology/beliefs, 2015
- “Should Churches (Defined as Churches, Temples, Mosques, Synagogues, etc.) Remain Tax-Exempt?” https://churchesandtaxes.procon.org/
- “Transcript: JFK’s Speech on His Religion” https://www.npr.org/templates/story/story.php?storyId=16920600, 2007
- Wight, Vanessa R., Chau, Michelle, Aratani, Yumiko. Who are America’s Poor Children? https://www.nccp.org/publications/pub_912.html, 2010