Thursday, July 09, 2015

It's Time To End Tax Exemptions for Religious Institutions

Sacred Heart Cathedral, Richmond, Virginia - the bishop recently blocked the employment of a friend as a teacher because she was divorced
The First Amendment of the U.S. Constitution grants religious freedom to all citizens and provides that there shall be no established church.  In drafting the First Amendment, the Founding Fathers were familiar with the special rights granted to the Church of England under British rule and the manner in which non-church members were required to pay taxes to support the established church.  Now, we see the fastest growing religious segment in America to be the "Nones" - those who belong to no church whatsoever.  Yet, through the tax-exemption granted to religious institutions, all citizens are forced to indirectly support churches that they not only do not belong to, but may also actively discriminate against them.  It's a situation that violates the First Amendment's protections.  A piece in Time makes the case that it is time to end tax-exempt status for religious institutions (a move that would give a financial boost to both states and the federal government).  Here are excerpts:
Two weeks ago, with a decision in Obergefell v. Hodges on the way, Sen. Mike Lee of Utah introduced the First Amendment Defense Act, which ensures that religious institutions won’t lose their tax exemptions if they don’t support same-sex marriage. Liberals tend to think Sen. Lee’s fears are unwarranted, and they can even point to Justice Anthony Kennedy’s opinion in Friday’s case, which promises “that religious organizations and persons [will be] given proper protection.”

I’m a gay-rights supporter who was elated by Friday’s Supreme Court decision — but I honor Sen. Lee’s fears.

I don’t, however, like his solution. And he’s not going to like mine. Rather than try to rescue tax-exempt status for organizations that dissent from settled public policy on matters of race or sexuality, we need to take a more radical step. It’s time to abolish, or greatly diminish, their tax-exempt statuses.

The federal revenue acts of 1909, 1913, and 1917 exempted nonprofits from the corporate excise and income taxes at the same time that they allowed people to deduct charitable contributions from their incomes. In other words, they gave tax-free status to the income of, and to the income donated to, nonprofits. Since then, state and local laws nearly everywhere have exempted nonprofits from all, or most, property tax and state income tax. This system of tax exemptions and deductions took shape partly during World War I, when it was feared that the new income tax, with top rates as high as 77%, might choke off charitable giving. But whatever its intentions, today it’s a mess, for several reasons.

First, the religious exemption has forced the IRS to decide what’s a religion, and thus has entangled church and state in the worst way. Since the world’s great religion scholars can’t agree on what a religion is, it’s absurd to ask a bunch of accountants, no matter how well-meaning.

The property taxes they aren’t paying have to be drawn from business owners and private citizens — in a real sense, you and I are subsidizing Mormon temples, Muslims mosques, Methodist churches.

Meanwhile, although nonprofits can’t endorse political candidates, they can be quite partisan and still thrive on the public dole, in the form of tax exemptions and deductions. 

Defenders of tax exemptions and deductions argue that if we got rid of them charitable giving would drop. It surely would, although how much, we can’t say. But of course government revenue would go up, and that money could be used to, say, house the homeless and feed the hungry. We’d have fewer church soup kitchens — but countries that truly care about poverty don’t rely on churches to run soup kitchens.

Exemption advocates also point out that churches would be squeezed out of high-property-value areas. But if it’s important to the people of Fifth Avenue to have a synagogue like Emanu-El or an Episcopal church like St. Thomas in their midst, they should pay full freight for it. They can afford to, more than millions of poorer New Yorkers whose tax bills the synagogue and church exemptions are currently inflating.
I can see keeping some exemptions; hospitals, in particular, are an indispensable, and noncontroversial, public good. And localities could always carve out sensible property-tax exceptions for nonprofits their communities need. But it’s time for most nonprofits, like those of us who faithfully cut checks to them, to pay their fair share.
There is absolutely no reason why churches and "religious" organizations like The Family Foundation or Family Research Council  should be indirectly supported by every taxpaying American.  Like the article's author, I believe some entities deserve continued tax exempt status, but the Catholic Church, the Mormon Church, Baptist churches and a host of others do not deserve to be supported by non-members and those they denigrate.   If their members will not support them and pay the tax bills, then let these church sell of properties or have them go to tax sale - just like what happens to you or me.

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