Should Religious Institutions Be Tax-Exempt?

Religion is and always has been a touchy issue for many people. Conflicts, wars and other forms of physical and non-physical violence have resulted from people’s viewpoint on religion and their viewpoint on other peoples religion. To circumvent this issue and avoid religious persecution a key principle was implemented into the U.S. Constitution. This principle is separation of church and state, which has and will continue to be a cornerstone of American democracy. The exact words should be very familiar to Colgate students; “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” However, one fact that undermines that fundamental principle of separation of church and state, along with violating the first amendment, is the tax exemption status of U.S. churches and other religious organizations. Religious organizations received an official federal income tax exemption in 1894, though they were basically unofficially tax exempt before. All 50 U.S. states and the District of Columbia exempt churches and other religious organizations from paying taxes.

By providing tax exemption to religious organizations Congress is/has been making a law that respects the establishment of a religion. To those that state that making religious institutions pay taxes would infringe on the first amendment clause of the Constitution, the current laws already do that and as long as religious organizations are still allowed freedom of religion and freedom of speech, then taxing them would be constitutional. The current system of tax exemption in itself discriminates between believers and non-believers of religions. Believers are entitled to a form of financial support while non-believers are not. This dichotomy may be unconstitutional as was argued by the Associate Justice of the US Supreme court, William O. Douglas, in his dissenting opinion in Walz v. Tax Commission of the City of New York.

Religious institutions receive all the benefits of tax paying institutions while returning much less than other secular groups. Secular charities, which oftentimes have purely altruistic non-religious goals, have to pay more in taxes than religious groups that don’t necessarily have purely altruistic goals. Furthermore, while secular charities are compelled to report their income and financial structure to the Internal Revenue Service (IRS), churches are granted automatic exemption from federal income tax without having to file a tax return. Secular charities and organizations are even scrutinized more heavily by the IRS, only one religious organization has ever been investigated and fined for violating the separating of church and state.  This organization was the Church at Pierce Creek in Binghamton, NY, which had placed an advertisement in USA Today and The Washington Times rebuking Bill Clinton four days before the 1992 presidential election. 

As I already hinted at, religious organizations unfortunately rarely remain neutral in political affairs. Despite a 1954 law banning political campaigning by tax-exempt groups, many religious institutions are clearly political and therefore should not be receiving tax exemptions. These institutions can be quite partisan and illegally endorse candidates and support legislation. They can violate the clauses of their tax exemption status almost completely blatantly while still receiving tax deductions.

Another reason to void the tax exemption status of religious organizations is the sheer amount of money this would provide the U.S. government. Not to seem completely greedy but in times of tough economic realities and growing debt, don’t you think the federal government should look into every reasonable way to recoup finances? Christian Churches in the United States alone own close to $500 billion in property that remains untaxed. A 2011 statistic indicated that New York City loses close to $627 million in property tax from religious institutions. Also by being tax exempt the average tax payer has to shoulder the expense of these religious organizations even if said individual opposes some or all religious doctrines. So even if you’re not Christian you fund Christian organizations, if you’re not Jewish you fund Jewish organizations, even if you’re not Muslim you fund Islamic organizations. This isn’t just limited to mainstream religions, every tax payer of the U.S. shoulders the debt and unpaid taxes of say the Church of Scientology or even to a satanist group.

 To summarize: the tax exemption status of religious organizations should be discontinued for a variety of reasons. One reason is a dichotomy that allows for certain benefits to believers while those benefits are unavailable to non-believers is created. Second, many religious organizations violate the clause of their tax exemption status by advocating for a party or piece of legislation. Additionally, religious organizations cost the federal government potential billions of dollars in lost taxes. The tax exemption status also forces all people to shoulder the debt of all religious groups regardless of the tax payer’s own beliefs.