Being Right: Religious Preservation

Should Religious Institutions Be Tax-Exempt?

It seems very paradoxical. In this modern day and age why should religious institutions still receive tax-exempt status? I’ll admit, as a market-oriented libertarian I had some reservations writing about this subject. I’ve wondered whether churches, synagogues and other places of worship. should still be given the tax-exempt status that we give other types of non-profits and charities – especially in a society that is rapidly secularizing. How can we reconcile essentially subsidizing the activities and interests of a segment of society that is increasingly out of touch with the rest of the population? What about churches or mosques that refuse to serve same-sex couples or perform same-sex marriages? Should that be ground for termination of non-profit status or is that punishing religious organizations for sincerely held, religious beliefs?

But I’ll admit that while I have heard the issue in the news, I have never really given it much thought. I do not think that any attempt to end religious organizations’ tax-exempt status is politically feasible in the current environment, but current dialogues shape future opinion and already mainstream news organizations like the New York Times and Time magazine are openly calling for the end of the exemption. This mirrors the trajectory of other causes such as marijuana legalization and same-sex marriage that while 20 years ago were unthinkable have now won or are winning in the court of public opinion.

So after I agreed to write this article, I had to go about forming my own opinion on the issue. The main question I asked myself is how the world would change if religious organizations lost their exempt status. Most churches operate on extremely narrow margins. Small churches especially rely almost entirely on support from their congregations for everything. The donation plate that goes around at the end of service pays for the lights to stay on, for the staff to get paid modest salaries and for the church to hold food drives and other charity events, among other things. Churches often don’t pay taxes on their real estate or the donations that they receive and the donors can write off their donations on their taxes. Many churches are very old and reside on valuable property and in valuable buildings. The simple reality is that most churches would not be able to survive if the exemption goes away. Communities would see their local churches vanish. Historic churches in cities like New York and San Francisco with extremely high real estate prices could be priced out entirely or forced out to the fringe. Less well off communities – where religious attendance may be higher – would be impacted the most. In these communities, religious organizations provide not only extensive community and charity services but also run after school programs to keep kids in school, provide a shared space and foster a sense of community in tough areas. In these areas, religious organizations and leaders serve not only religious purposes but also have significant, generally positive impacts in the communities they reside. These churches often have the most impact with the fewest resources and would be hit the hardest if the tax-exempt status were to be taken away. Simply put, ending the religious exemption would be the end of religious organizations, as we know them, in America.

There are people who would respond that by getting rid of this exemption, the government would be able to collect more tax revenue and more effectively to serve these communities. But, the government is generally inefficient and it is unclear how much revenue is actually lost due to this exemption. Furthermore, religious leaders often play a role in communities that cannot be easily replicated. Religious leaders see their congregations on a regular basis, live and work in these communities and can tailor their actions to best serve individuals in that community.

There are also people who argue that because some religious institutions have a negative view of same-sex marriage, the government granting them tax-exempt status is an endorsement or at least an acceptance of their views. But all sorts of organizations get tax-exempt status; personal belief is generally not an accepted reason to deny non-profits their tax exemption. But more importantly, we live in a liberal society that purports to value the open exchange and debate of ideas. Can we really claim to be tolerant if we are intolerant of people with ideas that differ from ours? I do not agree with religious groups’ opposition to same-sex marriage but I respect their right to that belief and getting rid of the exemption would go a long way in silencing the religious voice. A liberal society has to support differing ideas regardless of how the mainstream sector views those ideas. Even without the benefit that religious organizations bring to communities, it would still be wrong to end the religious tax exemption.