Bell Curve The Law Talking Guy Raised by Republicans U.S. West

Monday, May 25, 2009

Churches, Taxes, and Money: A Vestryman's Perspective

There are two items to this post.

1. Abbreviated history of Churches and taxation in America.

Perhaps the history helps explain our current situation. Nondiscrimination laws were nonexistent in the first century of the republic, and in colonial days. The jurisprudence that later developed around non-discriminaton laws (what republicans call "activism") to protect the minorities from majority rule, did not yet exist. Also, the First Amendment was not applied to the individual states until the end of the 19th century, so several states, including Mass and VA, had state-supported churches into the 1830s.

What was on their minds was what became John Marshall's dictum, "the power to tax is the power to destroy." So the way dreamed up to protect churches was to forbid taxation of them. When the modern income tax code was adopted in the 1940s the policy was left in tact.

Money changes everything, though.
If you look at who pays income taxes, you will see that the power of the personal deduction for charitable giving did not become salient until the 1970s. Also, churches were always political in many ways, but could easily avoid direct endorsement of a candidate. Until the 1980s when TV ads became the norm for even small campaigns, the cost of running most campaigns was so small that campaigning in churches consisted of candidates being invited to talk to the congregation, not congregations shopping for candidates with their money and volunteer base. The 1980s abortion politics began to intersect with church activism. Then, the 1990s saw a dramatic invasion into politics by right-wing "christian conservative" churches, esp. the Southern Baptists, became the organizing locus for volunteer and fundraising efforts for the GOP - particularly in the South.

So you now have a situation where one political party relies heavily on churches for organization and funds (the Republicans) and this stands largely at odds with a tax code that envisioned churches being largely non-political (being, at most cause-oriented rather than party-oriented).

Now that so many churches are so political, and the dollars matter, you get something like Liberty University kicking a political party off campus saying it is un-Christian. The tax exemption is no longer separating church and state, but interfering with church activities that they now define as including political action.

2. How Churches Operate

What's the "dollars and sense" reason for not taxing churches? Churches are not profit centers. I am the chairman of the board (title: senior warden of the "vestry") of my rather well-off parish in Los Angeles. We get about 1/3 of our income from endowments, 1/3 from member pledges, and 1/3 from rent of a portion of our property to a children's day school (the church orginally ran its own school on the property 40 years ago). We are, therefore, much much better off than most churches. Normally we can afford two full-time clergy and a full range of programs.

Even so, we run on a shoestring. About 11% of our income goes to the diocese for our fund of the "mission share" (divided between charity and administration), which feels like a substantial tax as it is. We have to maintain a very large physical structure - sort of like a mini-convention center, with a worship sanctuary, a fellowship hall, sunday school classrooms, office space for clergy, choir practice areas, and so forth. We do this without "sales" of any kind. Members are asked to pledge a percentage of their income, if they can (the norm is probably in the 3-4% range, but it's a bit tough to calculate). If the government took a third of our income in taxes, it would be like wiping out all of our pledges. To run the institution with $200K less would be crippling. I cannot imagine how a poorer church would survive. If we also had to pay property tax on the building - a big space in a downtown urban area - that would cost at least another $40K/year, raising our effective tax burden to about 40% of our total income. Ask yourself how easy it would be for you and your friends to pool enough money to buy and decorate a large space like this where the "business plan" is to give away as much as possible and rely on donations. We have something around $2K-$3K monthly in utilities, depending on weather and usage. These are big costs to spread around.

And, of course, if the donations to the church were not tax-deductible, the amount of pledge support would go down (we don't know by how much, but it would be a hit). Certainly, the larger donations to the church endowment (gifts in wills, for example) would evaporate.

The difference between this and 'entertainment' is that, among other things we don't charge admission and don't sell products. We want members to pledge a % of their income, but we don't do audits, and large numbers of people attend who do not join. A major unspoken function of the institution is to provide a nice 'theater set' for Christmas and Easter celebrations for the hoards of non-members to attend, where they ritually reaffirm some thin Christian identity and might explore the possibility of returning. This behavior varies, of course. Since Mormons do audit members and require a tithe, some of this does not apply to them. Unlike the Roman Catholics, we do not charge for most priestly services (weddings, funerals, baptisms). Jewish congregations typically charge for high holy days (it is something like selling seats at a stadium, with the "best" seats being mor eexpensive). These are all somewhat different fundraising mechanisms, but most American religious groups rely on the total-volunteer-donation model I have suggested.

I don't want to detail all the charitable activities the church also produces, but we give away something like a sixth or a seventh of our total income (including what goes to the diocese). For example, the Good Friday offerings always go to the church in Jerusalem (it's basically charitable support for Palestinians). None of this accounts for the large amount of free labor provided by parishioners.

All in all, it's a tight budget even at a relatively wealthy church. In poorer, rural areas it's even harder. Taxing churches would destroy the financial model that almost every church is built on. Most churches are not businesses, in other words. Perhaps some churches are like businesses and we should consider that. For example, perhaps the rent we charge for the school should be taxed at some rate. There is a reason why churches used to be tax-supported institutions - because running them on voluntary donations is really hard.

I should add that the average size of major-denomination parishes in this country is about 120 pledging members. For reasons relating to human interaction, it seems that a single pastor has a hard time growing an organization beyond that size without extra clergy support. Beyond that size, the relationships become too anonymous. Larger churches usually have a multiple-clergy model. What we normally do - two clergymembers - is the hardest financial model of all, because our membership is not much above the average. We can't afford the second one right now given the endowment's decline by nearly 1/3 in value and the hit that pledges are taking in this economic crisis, so we were lucky that the second pastor voluntarily got a new job (left the parish) just before the financial crash hit last year. Otherwise I just don't know how much more deferred maintenance on an aging 40-year-old building we can do.

I don't consider running the church operations itself to be a business. But where there are sales (e.g., rental property or running a school) perhaps those shoudl be taxed like the business enterprises they really are.


Anonymous said...
This comment has been removed by a blog administrator.
The Law Talking Guy said...
This comment has been removed by the author.
Raised By Republicans said...

Does the practice of Christianity necessitate maintaining a "convention center" like building?

That would seem to be the overwhelming share of the church's expenditure. If it were taxed it might make it difficult to worship with the big building with all the art work inside. Perhaps it would transform the nature of congregations and encourage smaller ones that could function at lower costs.

Give that 11% goes to some unknown combination of higher level administrative costs and charities and about the same amount other than that goes to charities which includes donations from one church to another church (so not direct material benefit to anyone), I'm still far from convinced that churches are an efficient means of addressing poverty.

They seem to be mainly oriented around self perpetuation.

eiscremeluvr said...

"Don't mess with The Law Talking Guy"

The Law Talking Guy said...

RBR's comments are so odd I'm trying to figure out if he was drinking tonight.

1. Who said that churches were an efficient means of addressing poverty? I sure didn't.

2. The "convention center" analogy has been misconstrued. I meant only to convey that you need more than just a worship space - you need some support areas too. The overwhelming share of the church's expenditure is on the sanctuary itself, not the supporting areas. I should add, however, that it is the supporting areas that are of most use to the community. Most well-established urban churches have for years allowed non-profit theatres, AA meetings, and the like to use their spaces free of charge or for a nominal maintenance fee. So getting churches to shed those spaces is not great for the community.

3. The idea of encouraging smaller congregations through taxation makes no sense. The approx. 100-pledging-member congregation is already quite small. The megachurch is actually the best way to aggregate funds. Economy of scale.

4. The real problem is that the creation of a sanctuary requires dedication of special space with no secular function. So you can't rent it out on weekdays to recapture some of the market value on which it would be taxed.

I think my comments explain well enough why American politics will not tolerate an end to the tax-exempt status for church property. To do so would impose a very heavy cost.

I also note that public and private schools and universities are generally exempt from property taxes (public by their nature, private by law). Many states apply this more broadly to all non-profit institutions.

Dr. Strangelove said...

Very interesting post, LTG. It really shows why the threat of removing the tax exemption is such a powerful tool.

I believe RbR is correct that the primary function of a church is self-perpetuation. That is true of nearly all organizations. Those that did not place a high value on self-perpetuation are no longer with us. (That is, of course, the same mechanism we call Evolution in the biological context.)

Nevertheless, churches have special protections in our Constitution, and we must respect that.

Bob said...

Thanks for your informative post, and illustrating the "balance sheet" of a working church to us.

If you (or anyone) could elaborate on your first item -- why was there a perceived need to protect churches, before other forms of non-discrimination laws, etc.? Surely a state-supported church isn't in danger?

Did "the power to tax is the power to destroy" indicate that there was a concern that government would destroy religion?

Or is it that, like a state-supported institution, the idea of taxing churches didn't seem to make sense, kind of like taxing military income? (Or your later examples of schools and universities being exempt from property taxes?)

Raised By Republicans said...

"1. Who said that churches were an efficient means of addressing poverty? I sure didn't. "

Perhaps I misunderstood something you had said in an earlier comment..."In poor rural and urban areas, that would be deadly. " I thought you meant actual death of people not just the "death" of churches as the organizations we see today. This was the motivation for my earlier questions about the percent of church budgets that go to charity and directly benefiting the poor. I thought that's what you are referring to with your "deadly" comment.

The economy of scale thing is a good point. Taxes religious organizations would probably encourage a bifurcation of large, wealthy mega-congregations and small "lean and mean" home prayer groups. What would go away are the medium sized groups with traditional church facilities like LTGs.

Another question: Do churches have to pay payroll taxes? Do ministers pay income taxes?


Are you assuming that these Churches are the only means of providing these resources and are irreplaceable. If not then I don't have a problem with churches not being able to be the ones who provide these things.

I understand that American politics is dominated by religious organizations and people. There is de facto requirement that you openly declare that you belong to some church or other to run for higher office. So of course none of this will ever happen.


I don't think the fear was that the state would destroy all religious organizations. Rather I think the fear was that they would destroy some and not others. The fear was that the tax code would be used to suppress some religions and favor others - like was common practice around the world at the time. In that context, not taxing any religion was an improvement. The problem is that it effectively establishes religion if not a particular religion as a privileged institution in society.

uswest said...

Thanks for this post LTG. Very detailed and thought out.

We talked about the first amendment right to freedom if speech, but let's not forget the freedom to assemble as well, so I don't begrudge Church property . . . often used for civic events as well like voting polls. And in rural areas, often the only place to assemble for any purpose is the local church.

LTG points out that churches aren't really businesses. Well they are; they are non-profit businesses. Taxes are usually on "profits" and assets. When there is no profit, there is no tax. Asset taxes depend largely on they type and use of the asset. Maybe you could develop a code whereby a certain percentage of the donations collected has to be dedicated to charitable works or community service for an organization to remain 100% tax exempt.

I think there is something fundamentally wrong with giving tax exemptions for charity. It's either charity or it's not. Giving money to charity for a tax exemption may be a "win-win" situation for those involved in the transaction, but then it also provides a justification for the very well-off to dictate to the very poor through the power of philanthropy. This idea that social services should be provided through religiously or ideologically based organizations (i.e. faith based initiatives) is flawed. I tend to think that society, though its governmental institutions, has a responsibility to support those in distress. I do not believe this should be the responsibility of churches. The tax code in its current state pretty much co-ops churches by forcing them to do work that isn't their responsibility and it is coercive for the poor.

So I would eliminate or reduce the deduction for individual donations and leave the tax exempt status of churches alone. Why tax the same money twice?

The Law Talking Guy said...

Sorry, RBR. I was terribly confused. The "drinking" bit sounded funnier in my head.

I meant only that changing the rules would be deadly to the church institutions, especially poor rural ones. I do not suggest that churches provide some charitable or other economic function that the state could not or should not.

Bob- the original ban on taxing churches was a ban on taxing the non-state supported churches (in order to harm them) where they existed. I must not have made that clear.

USWest- you are right that the charitable deduction is troublesome in some ways, but the intention is clear. The government wants to promote private giving to institutions that perform functions that have social value. We have written that 'social value' very broadly to include almost any not-for-profit entity on the (not crazy) theory the "market" for providing volunteer or non-profit services creates such entities to fill perceived social needs. Churches are not charities; their function is to be churches. But similarly schools and not charities.

I guess, USWest, when I said a church isn't a business, I mean that I can't identify the "product." Schools "sell" education (sort of), so the business analogy is a bit easier to see. While you can have fun talking about churches selling services it's not terribly accurate. There is relatively little connection between the amount we give and what we receive (the connection is sort of the reverse, actually, those who value the institution the most give more).

Anonymous said...

I think Mother Teresa is the example of what church is supposed to do, a true humanitarian...

The Vatican is full of gold and priceless art, in the middle of a slum...I guess the real con here to me is, how much are will you pay to save your soul? I think Jesus and his lawyer might have a problem with all of it.

USwest said...

LTG, Churches, like businesses have infrasctructre, assets, employees, and customers. It seems crass to say that the product is "faith" or comfort, or something of a spiritual nature. YOu pointed out that churches rent space, they conduct weddings and baptisims, and they often collect for these services . . . products. We have an economy that runs on the service sector and many of those services are intagnible.

As an outsider, I don't see churches as holy institutions. At best they are communities of like minded people who seek spiritual re-enforcement. At worst, they can be manipulative institutions whose promary goal is, as RBR said, self-preservation.

As for tax deductions for charitable giving . . . I understand what they purpose is. I just don't agree, really.

Raised By Republicans said...

There is another question here too. Does society have such a compelling interest in preserving highly institutionalized religion, complete with big buildings and professional staff (pastors)?

I mean, I can see how spiritual exploration would be a service for some individuals (but not all). But does this require a large building and profession staff? And does providing these resources for that segment of the population that wants these things do so much good for the rest of us that we should use tax dollars to subsidize it?

The Law Talking Guy said...

I would offer, RBR, that preservation of institutional religions from the depredations of a hostile state was one of the prime movers in the founding of the country. It is certainly widely valued. In his "four freedoms," FDR singled out "freedom of worship" right up there. I also will offer that corporate worship (meaning group worship by a body of believers) is a fundamentally different experience than individual spiritual exploration. The gospels record that Jesus said he would be there "Whenever two or three are gathered together in my name." Jews require a minyan (10) to pray at many important times. I presume many other religions have similar group commands. Religion is not just a "me" thing, but a "we" thing. So yes, some religious expression needs some institutional form.

Raised By Republicans said...

That's fine. But does group worship require a large expensive building with art work etc? A minyan (Hebrew for quorum?) of 10 people certainly does not require a great deal of expenditure on buildings.

The biggest expenditure for your church is the building and the land it sits on - even if you were taxed you will still spend far more on the building than on the taxes.

I'm thinking of other group organizations and the infra structure they require. They often use rented store front office space and look for inexpensive options. They don't jazz up the place with lots of expensive art work.

There is a tradition in organized religion of using the building to instill a sense of awe in those that enter it. This is a carry over from the days when THE Church was also interested in maintaining temporal power.

We're not talking about destroying freedom of worship either by individuals or groups (at least I'm not). We're talking about worship having a privileged position. We're talking about a state mandated subsidy for worship in a particular form - that is worship in large, expensive buildings with full time, professional staffs etc. What is the compelling social need for that?

Dr. Strangelove said...

Religion enjoys a privileged position in our Constitution. No other activity, organization, or institution is granted such clear protection. Like it or not, religion gets special treatment.

Characterizing the tax exemption for religious activity as a "subsidy" is questionable to me. (a) No tax dollars are spent to support religion. (b) The tax exemption for religious activity is not meant to encourage religion but only to avert government interference. (c) The blanket exemption does not privilege one form of worship over another but gives churches the freedom to organize as they please. Some choose to worship in humble surroundings, saving their cash for charitable activities; others prefer to invest in giant halls adorned in silver and gold.

Raised By Republicans said...

I understand that religion gets special treatment and that this is - for a variety of political reasons - likely to persist for the foreseeable future. I'm just posing some philosophical questions about the inherent public interest in that privileged position.

It is simply not true that no tax dollars are spent to support religion. Public schools and universities are permitted, indeed forced, to allow religious organizations use their facilities. But the religious organizations make no contribution through taxes to the provision of those facilities.

Leaving that issue aside churches are protected by fire and police. Churches have access to sewer and water services. All of these things are paid for (or at least supplied at a loss because of tax dollars. Churches don't contribute but do avail themselves of these services.

With regard to point c. How much is it worth to the average church goer to worship in a fancy building? Is it worth 10% of their income in contributions? 15%? To the extent that privileged tax status lowers the amount of donations big fancy building churches require, it does favor particular forms of worship. In a free market of spirituality (lousy analogy but work with me here), some people are simply not willing to pay a large share of their income to worship in a fancy building as opposed to their friends' living rooms or a rented store front in a mall or whatever.

Large, ornate churches have been a fixture of Christianity since the Roman Empire made it the official religion. And churches have always relied on the power of the state to supply these buildings. In the old days the division between state and church was blurred and the state would simply build the church. Now churches get a pass on taxes that all other organizations have to pay.

Why? What is the compelling public interest in doing this? I can see the public interest in not singling out a particular sect for favor or disfavor but what is the compelling public interest now?

The Law Talking Guy said...

I am reminded of a comment made by a convert to Orthodox Christianity who was asked to comment on the gaudiness of their ceremonies, with all the gold, incense, and icons.

In reply she said that the services were worship and thanksgiving for the the Lord of Hosts, the Creator of the Universe: it is supposed to be beautiful! beautiful to see, to hear, to smell, and to feel, to breathe in.

Open spaces and artwork elevate the soul. One of the great spiritual experiences I can recall is walking the labyrinth (a painted labyrinth) on the floor of Grace Cathedral in San Francisco. We all removed our shoes and began following the path around and around each other. You can see a picture of it: As we walked the labyrinth it was as if we became unhinged from time, lost in meditations. Walking is, itself, a form of prayer. Some paused from time to time for body prayer: the stretching of limbs, turning, extension of the body and controlled breaths, centering the experience into one's physical being. Some breathed the same short prayer repeatedly, as a chant, to clear the mind. We walked alone, but together. Then we each quietly emerged at the center and looked up and around us. There, at the center of the cathedral, the ceiling vaulted high above, the light streamed in through the richly colored windows, and I stood in the midst of all this swirling humanity. When I emerged from great doors of the cathedral on the open spaces atop Nob Hill, the world and I seemed different.

Pombat said...

Thanks for sharing your experience of Grace Cathedral LTG - sounds like it touched you quite deeply.

I don't get that from churches though. I get that feeling from being in places untouched (or at least mostly untouched!) by man - looking out across the vastness of deserts, or across beautiful rolling landscapes. I also get it from being in places like the Forum in Rome, or Pompeii/Herculaneum (Ercolano), or Stonehenge - walking in places that have existed for thousands of years, that were created by people and cultures so very different to ours. The feeling of awe, of being just one very small part in this ongoing history of our world, that's what touches me.

I have visited churches that I found beautiful (first seeing Milan's Duomo by moonlight was pretty special; I'm also rather fond of some of the English cathedrals - Salisbury springs to mind), but the overwhelming memory that is coming to mind right now is the almost physical revulsion I felt at the ostentatious grandeur of St Peter's (Vatican City). The sheer amount of wealth that was gathered there seemed nothing but hypocritical to me - my inner voice kept asking how many people could this feed, clothe and house?!

So, I guess what I'm saying is that the physical buildings often represent hypocrisy to me - they're relics of an age when The Church was overtly political, when going into the church was a sure way to power and influence, and they should not be necessary for true worship.

All of that said, I'm looking at things through European eyes, where the church has a much longer (and thus more sordid) history. And I do appreciate just how important having a physical place that is the centre of your spiritual life can be for people. I just question what kind of place that needs to be, and I also question whether we really need lots of different places for all the different flavours of spirituality - the underlying lessons/beliefs/tenets of religion/spirituality seem pretty much the same to me.

I also think we need to untangle "the church", i.e. the local gathering place, from "The Church", the big overarching hierarchy, which often has an agenda.

Raised By Republicans said...

I completely respect that many people would like to worship in a beautiful building. But why shouldn't people who appreciate that kind of thing be expected to pay for all of the costs involved - including the public services required to maintain it? I think it is very telling that LTG's response to the prospect of equal taxation for churches was not, "My co-religionists and I would gladly double our contributions to get to worship in our beautiful church." Rather it was to suggest that taxation would destroy the church - implying that maintaining his church on an equal basis with other organizations costs more than he and his co-religionists are willing to pay themselves. The rest of us are making up the difference.

Why should the subset of people who are moved by these things expect people like Pombat and me to help pay for it? I get that that is the way the world is. But is it just that non-believers be forced to help pay the tab? Granted, we pay less of the tab than we used to be forced to back in the bad old days but we are still forced to help pay.

Dr. Strangelove said...

1. At the risk of putting my foot in my mouth (and that would not be tasty!) I will say I believe RbR exaggerates the "support" that public schools or universities provide to religious groups. As government institutions, public schools and universities may not provide meaningful support to religious activities. Churches most certainly are not permitted to set up shop on public land. (Hell, you can't even put up a nativity display!) Yes, if some students wish to hold regular "Bible study" in an unused classroom after hours, they have as much right to use that space as any other club would, but that is all. Remember: the only reason this level of "support" is constitutionally permissible is precisely because it is negligible!

2. If you let one building catch fire, or one building become a hive of scum and villainy, then the entire community is threatened. In an urban setting, we would force churches to accept fire and police protection even if it were against their religion! So it is good you left that point aside :-)

3. Churches pay sewage, water, and electric bills. I cannot speak for every community, but the Los Angeles Department of Water and Power receives no tax support. The LA DWP funds its operations entirely by assessing fees and selling its own bonds (the interest for which it pays through fees). The LA DWP is a revenue-producing contributor to the Los Angeles City general fund.

I guess what I am saying is, from a public policy perspective, the argument that taxpayers subsidize religion carries little weight. Consistent with the First Amendment, there is negligible public support for religion.

Raised By Republicans said...

LA DWP is an exceptional situation. Many local utilities operate at a loss. There are roads etc.

As for public safety, yes, Churches are free riders. I agree. My question is this: is that just? Should a church with a congregation of middle class people with an ornate building in valuable location be given the same consideration as people who have no means to contribute to the provision of public services that serve the community in which they exist?

As for church use of public space. I suppose it is a question of perception and there are regional variations. After a natural disaster here in my town recently, a church lost their building and the public schools were opened up to them for months so that the congregation could operate out of the local school. There was no debate about it. There was no bill presented to the church for the use of the building etc. This church was given unlimited access to a public building for months rent free. I propose that while the specific circumstances are exceptional, it speaks to the unquestioned privileged position of religion.

I will ask again my basic question. Is it just? Dr. S and LTG have argued all around this question. LTG has argued about how wonderful ornate religious buildings are and how important they are as an expression of faith. Dr. S. says there really isn't that much public support so it doesn't matter. Neither addresses the basic question. Is it just that one particular type of organization is set above all others in this way?

Dr. Strangelove said...

Obviously we all agree religious institutions enjoy special privileges--specifically, their tax exemption. I still contend that it is specious to equate this tax exemption with government funding. Churches do not contribute to the general fund, but the extent to which they are a drain on the general fund is negligible. Exiling churches from a city would not improve that city's budget.

Now, as to RbR's question of whether the tax exemption is fair... That depends on one's opinion of religion. Those who value religion claim various intangible benefits to society. While I doubt most of those claims--and to the extent there are actual benefits from religion, I doubt they are unique--I think there is value in defending religious diversity. The tax exemption was created largely to protect religious diversity from the tyranny of the majority. Given the ugly history of religious oppression in this world--given how religious conflict has bruised nations and peoples everywhere--a little prophylactic tax exemption to mitigate the dangers posed by this particularly virulent form of social madness is a wise precaution.

Raised By Republicans said...

My view is that the tax exemption was originally established to protect religions from EACH OTHER. At the time the idea that there could be people of no religion at all was somewhat fanciful. That is no longer the case. Also, in a firmly established democracy there are other protections (freedom of assembly, freedom of speech etc) that protect religious as well as secular forms of organization and expression. Not to mention the 1st amendment's specific protection of religious diversity.

It seems to me that protecting religious diversity requires only that all religions be treated the same way. That can be done by having them all exempt from taxes or all covered by the same tax code. Back in the 18th century the norm was to tax some churches and not others. We resolved not to tax any churches. But we could just as easily resolve the problem by evenly applying the tax code.

Dr. S. you keep making the argument that none of this matters because churches don't drain public resources that much. But what if there were a small class of people who were free of tax obligations. Let's say they weren't populous enough to noticeably effect the provision of public services to the rest of us but they used them nevertheless. If this group of tax exempt people were defined by their ethnicity, class or gender there would be nearly universal outrage. But because this special class of tax exempt people are defined by religious as opposed to secular status, there is mute acceptance.

Dr. Strangelove said...

I like how you put it: that the tax exemption is there to protect religions from each other! Sad, but true. We agree on this.

Theoretically, the idea of applying the tax code equally to all religions makes sense, I agree. But I have two practical concerns. First, I am not sure that anything other than "no taxes" would ever really end up being equal. Second, the tax code would inevitably distort religious practice. You have said yourself that property taxes could force religions to lose their big buildings and make do with smaller congregations. It is not hard to imagine how these sorts of pressures could be used to inhibit religious freedom, or even drive out certain groups by making their practices too expensive. Exposing religion to taxation opens the door to government interference in religion, and there is no way around it.

Your hypothetical example of tax exemption has some problems. First, people are not tax exempt. Religious adherents pay the same taxes as everyone else. Second, many religions are strongly identified with ethnic groups. Far from causing universal outrage, this identification merely provides another reason for society to protect their unique forms of worship: supporting cultural diversity.

Raised By Republicans said...

What if instead of a class of people, it was oil companies?

Dr. Strangelove said...

Oil companies?? Now you're just being obtuse, RbR :-) There is nothing else equivalent to religion... Thank god.

Raised By Republicans said...

No seriously, what if there were some kind of company that did not have to pay taxes just because of the type of company they are?

The fact that you think it's "obtuse" kind of proves my point.

I will take silence as consent in this. The consensus of this blog is that tax exemption for religious organizations is NOT just. It is a form of coercive action by the state to force non-believers to subsidize the activities of believers against their will. This is based on the presumption that either everyone is a believer or that believers are inherently superior citizens to non-believers.

The Law Talking Guy said...

RBR, the question you asked was whether big buildings were needed in religion. Non-churchgoing people often think that "spirituality" as they call it is an individual thing (as do many radical protestants) and that organized religion is inherently hypocritical and of no spiritual worth. Why spend the money on a building, rather than on the poor? (This from people who also do not spend all their money on the poor). You should be acting like Mother Teresa, they ask (when they do not, themselves, act that way). Having answered that religious buildings do serve a genuine religious purpose - they're not just filled with "fancy artwork" as you put it - you now say that I didn't answer your real question, whether it the tax exemption was just.

Well, that's one the one hand a sort of strange question. Do we measure every government tax policy by how "just" it is? Is the mortgage interest deduction just? Oil depletion allowance? R&D credits? These are justified with respect to how they advance certain economic policies that are viewed as beneficial, not as to their "justness." The tax exemption for non-profits, including religious non-profits, reflects a legislative goal that we want to encourage these activities. When the income tax was broadened in the mid-20th century to affect most people, it was recognized that imposing those burdens on non-profit institutions, including churches, would very much hurt them. Legislators found no compelling political, economic, or social reason to do this. Recall that before the growth of big secular non-profit charities in the late 20th century, the vast majority of charitable work was done through churches. A lot still is - and much of it with very little overhead. [For example, when our church does a project (all local churches participate in a huge stadium dinner for the homeless a couple times a year) all the labor is free and most of the food is donated by parishioners or sponsor businesses. No overhead.]

I have explained, I hope, my opinion that changing these rules *now* would cripple most churches, and I bet the same goes for non-profit schools and other non-profit institutions or charities. Worse, the change would punish those who have relied on them.

I don't think religious institutions are any less deserving of a tax-exemption than secular non-profit institutions (so long as they are not engaging in profitmaking activities, of course).

Dr. Strangelove said...

Once again, RbR goes right on asserting there is some significant taxpayer subsidy of religion in this country, ignoring and brushing aside all of my comments to the contrary. (In fact, he goes even further now, describing a "coercive" subsidy.) And now he claims I have been silent on this matter, and that my silence should be taken as consent?! Is he trying to get me to flip out??!!

If so, RbR, then congratulations: you just got wish. I have had it with your pigheaded refusal to listen to me. You never concede a point... You do not even do me the basic courtesy of acknowledging when I have made a point. In nearly every comment of mine on this thread, you will find that I have recognized and acknowledged points you have made, agreeing with you several times--and doing so with respect. From you I feel only contempt. I deserve better than that.

For the last time... The tax exemption for religious organizations represents a negligible subsidy, and as such is justified for several reasons. It prevents government meddling with the private lives of citizens. It prevents all kinds of religious oppression, big and small. It celebrates ethnic and cultural diversity. And as LTG has mentioned repeatedly, removing the exemption now would be terribly harmful and arguably quite unfair indeed. All told, the tax exemption is a tiny price to pay for domestic tranquility.

Look, you know I am an atheist, and in my opinion in a perfect world there would be no religion at all--so in that most abstract sense I agree that it is not "fair" that religion gets a tax exemption when others do not. But given that religion is in reality widespread and hugely important to millions of Americans, the tax exemption is clearly justified. Similarly, in a perfect world, there would be no AIDS or drug abuse--so in that most abstract sense it is not "fair" to spend taxpayer money on needle exchange programs. But given that AIDS is in reality widespread and hugely devastating to millions of Americans, needle exchange programs make good sense.

In an unfair world, unfair policies are, as a practical matter, sometimes the most just thing we can do. (Just think about the logic behind Affirmative Action.)

The Law Talking Guy said...

FYI, we do pay property tax on a portion of the church property. I presume this is the portion that we rent out. So churches are not as tax-free as you might think.

Of course, given the vagaries of Prop 13, the church pays less in property tax than I do for a much, much more valuable piece of land.

Bob said...

I know this thread is finished, and should be left that way. I am not trying to agitate and force people to defend their deeply held views, the cores of which are simply incompatible.

But I thought I had an elaborations on other's arguments that might (or might not) make them clearer.

Responding to RbR's posit "But what if there were a small class of people who were free of tax obligations." Well, there are, or at least a class that get dramatically reduced tax obligations: the blind. It's right there on the 1040 form.

I have nothing against blind people, but there's nothing particularly "just" about my tax burden helping them at a higher rate then they pay themselves.

There is not, needless to say, "nearly universal outrage."

My point here is simply that religion is one of many beneficiaries of government, who don't on balance pay for it at the same rate I do. Most of the beneficiaries are not what I would choose, at the rates I would choose, but that's democracy for you. It's not clear to me at all that religion is treated significantly differently or benefits financially quantitatively more than other privileged groups.

Bob said...

I knew there was another comment I had in mind.

I think, as always, it is critical to realize that there is a great deal of local difference in how privileged religious institutions are. Federal income tax is one thing, but local services and local enforcement (which those taxes pay for) can be inconsequential or extremely unjust.

RbR's example of a school more or less being donated to a church doesn't surprise me at all. I have certainly lived in towns where nativity scenes _were_ set up on public land every year. There are school sports teams that pray at the behest of their coach every practice.

These practices are wrong, in my opinion, but they are widespread. RbR is probably right to rankle at the exceptional privileges he sees religious institutions enjoy around him.

I would suggest that those privileges are not universal, that LTG's church is not in the same situation, and probably wouldn't exploit the public sphere that way even if it could do so.

In my mind, the tax code isn't where the problem lies. It is that some localities do not revere the separation of church and state as much as they revere the mythology of their homogeneous culture.

What I'm saying is, the provinciality that says "hey, surely we're all Christians here, so we're not really hurting anyone if we say a little prayer before the town meeting" is alive and well in a lot of America. Thankfully, there are also many parts of the country where such reasoning is unacceptable.

We need to hold in our minds that this blog reports from many corners of America and the world.