Now’s the Time To End Tax Exemptions for Religious Institutions

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DLCreed's picture

Tax exemptions are not and have never been a "subsidy".  They are a protection to keep the government from controlling religious organizations.  The power to tax IS the power to control.  Churches pay many taxes and most churches give back to the community WAY more than they receive in tax benefits anyway.  If our church has to start paying property taxes, income taxes, etc... we will have tens of thousands of dollars less to help with things like homeless shelters, food banks, community support, etc...  How many missionaries will have to come home, schools will have to close, people will go unfed/unclothed/unsheltered if we have to start writing huge checks to the Federal government, state government, county government and city government.  

We should not buy into this argument built on a fundamental misunderstanding of what tax exemptions are.  They are protective exemptions plain and simple, not subsidies.

Aaron Blumer's picture

EditorAdmin

Thanks for beating me to this one. The absence of taxation is not subsidy. The money belongs to the individuals and institutions that earn it or receive it in donations. Allowing them to keep more/all of it is not subsidy. The distinction is not trivial.... and the loss of this distinction in public policy rhetoric has contributed a great deal to our culture of government overreach.

Views expressed are always my own and not my employer's, my church's, my family's, my neighbors', or my pets'. The house plants have authorized me to speak for them, however, and they always agree with me.

Jay's picture

If I were a pastor - and I'm not - I would start looking into the process of changing the church into a for-profit business.  I think that the revocation of 501(c)(3) status is inevitable as society continues to equate sexual identity / sexual preference with race and the movement towards absolute sexual liberty accelerates.

I'm not saying that churches should give it up now, but start being prepared so that we can surrender our 'weapon' of tax exemption before the culture 'takes' it away.

That's my .02

"Our task today is to tell people — who no longer know what sin is...no longer see themselves as sinners, and no longer have room for these categories — that Christ died for sins of which they do not think they’re guilty." - David Wells

GregH's picture

Aaron Blumer wrote:

Thanks for beating me to this one. The absence of taxation is not subsidy. The money belongs to the individuals and institutions that earn it or receive it in donations. Allowing them to keep more/all of it is not subsidy. The distinction is not trivial.... and the loss of this distinction in public policy rhetoric has contributed a great deal to our culture of government overreach.

Yes and no. No one has the right to all the money they earn; that is conservative propaganda. The truth is that people and organizations have the opportunity to earn money (or receive donations) partly because the government gives them an environment to do so and they should be expected to pay for the services they receive. That is what taxes are for. And for sure, churches receive services from the government including access, protection, etc. Therefore, when a church does not pay for its services and the business down the street does, it is entirely reasonable to say that the business is subsidizing the church. 

I see no compelling reason why churches and organizations should get free services so I would be not be opposed to churches paying property taxes just like any other entity that pays for local services. Tax exemptions for donations is more complicated in my mind.

Barry L.'s picture

Then everyone should pay based on by what they benefit from the local government. Businesses should be charged less and individuals should pay a whole lot more than they are now because individuals benefit from local taxes by multiples over businesses.

Point is that your argument is flawed because taxes are socially engineered and in no way have anything to do with how much services are used by a certain taxpayer.

Also, hospitals, colleges, churches who do adhere to same sex marriage mandate will continue to be tax exempt. Which is discriminating based on religious beliefs. Are you saying we shouldn't challenge discrimination?

 

GregH's picture

Barry L. wrote:

Then everyone should pay based on by what they benefit from the local government. Businesses should be charged less and individuals should pay a whole lot more than they are now because individuals benefit from local taxes by multiples over businesses.

Point is that your argument is flawed because taxes are socially engineered and in no way have anything to do with how much services are used by a certain taxpayer.

Also, hospitals, colleges, churches who do adhere to same sex marriage mandate will continue to be tax exempt. Which is discriminating based on religious beliefs. Are you saying we shouldn't challenge discrimination?

Property taxes are based on the value of the property. That absolutely relates to the services that are provided. A big church uses more road resources for example. It requires more storm drainage capacity. It requires more protection. Is it perfect in how it charges for actual use? No. But that is the way pricing often works in the private sector too. For example, you pay a set amount for cable every month regardless of how much TV you watch. 

In my area, a church property worth $1 million would probably pay $8K annually in tax. Is that a lot for what it receives from the government? When you consider the fact that the government provides the roads that makes the church accessible in the first place, protection for that property on many levels from national down to local, and various utility and environmental services, it is a bargain. 

I get increasingly tired of those complaining about high taxes. My guess is the majority of people reading this are getting the bargain of the century when you compare what they pay to what they get. The same is true of churches.

Larry Nelson's picture

 

My church, located on a high-traffic, four-lane county highway in a Minneapolis suburb, and near the intersection of two interstate highways, has a 95,000 square foot building situated on 18 acres.  For insurance purposes, the building & fixtures alone are valued at $12,000,000+.  The land itself, purchased in the early 1960's when it was farmland, is now worth millions.

Let's say the total taxable value of the property would currently be $18M.  I'm estimating, based on an online search, that we'd have an annual property tax bill of $100,000 - $150,000.  If push came to shove, could we absorb that cost?  Sure.  Our annual "income" last fiscal year was about $5M, so that would be 2-3% of our giving. (Yes, we're a fairly large church.)

Would we have to curtail some programs or expenses to pay such an amount?  Maybe; maybe not.      

Barry L.'s picture

That businesses have to pay property taxes on equipment, furniture, fixtures, improvements, etc. Plus state sales tax on all your purchases. The expense will be more than what you are calculating.

Only about 20-25% of property taxes go to services. The rest for education, welfare, and servicing debt.  A church, in my opinion, would be paying much more than their fair share of taxes.

Again, the liberal argument is not that churches, hospitals, schools should not be tax exempt. It is that churches, hospitals, schools that do not adhere to a certain belief should not be tax exempt. 

Greg Long's picture

The author of this article betrays his bias against religion when he writes at the end of the article:

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.

So hospitals are an indispensable public good, but churches are not. The author should have familiarized himself with the reasons churches have historically been tax-exempt, which was in part because they were seen as a benefit to society and to the local community. That's the crux of the whole issue--churches (or at least some churches) will eventually be seen as harmful, not beneficial, to society. (And who does he think started most hospitals, anyway?)

Also, when Al Mohler tweeted something about this article, the author responded and said his article "had nothing to do with recent court decision." He tries to pretend he is being unbiased on this issue because he is calling for the revocation of tax-exempt status for all churches, not just churches that are against same-sex marriage. But that is simply smoke and mirrors.

-------
Greg Long, Ed.D. (SBTS)

Pastor of Adult Ministries
Grace Church, Des Moines, IA

Adjunct Instructor
School of Divinity
Liberty University

Jim's picture

I don't think it will  happen and I hope it doesn't 

If if happens I think it would cascade along these lines:

  • End of pastoral housing allowance

    • Risk of happening: Low to medium
    • Impact: Low (churches would need to raise salaries)
  • 501c3: End of non-profit status for churches, schools, et cetera
    • Risk: low
    • Impact: High
    • Comment: I see this as a future battleground in the courts.
  • Property tax exemption:
    • Risk: Lower than either of the above because it is a state and local government thing
    • Impact: Very high. Illustration: In the 55441 zip code (where I live). There is a for-profit Montessori school on 4.25 acres (⅓ of which is low wetland). They pay $ 28,000 per year in property taxes. My church is on 20 acres. Property tax could be $ 100,000 per year!)
Bert Perry's picture

Note that the guy wants to take down the entire system of nonprofit tax exemptions--since that hits foundations, universities, and the like as well, it's probably (a) a great idea and (b) does not have a snowball's chance in you know where of getting into law.  The big objection I'd have is the property tax, where towns could really put the screws to unpopular churches that way.  That said, Wisconsin has a limit on tax exempt church property that doesn't seem to be working out too badly.  It's possible.

The bright side--think Clearwater and other schools with a TON of land--is that it could discipline entities to only own what they need instead of collecting tons of land they're not using.

 

Aspiring to be a stick in the mud.

Jay's picture

Jim wrote:

I don't think it will  happen and I hope it doesn't 

If if happens I think it would cascade along these lines:​

  • 501c3: End of non-profit status for churches, schools, et cetera

    • Risk: low
    • Impact: High
    • Comment: I see this as a future battleground in the courts.

That would be fought for years in the courts and end up at SCOTUS again.  Even if the Republican controlled Senate and House ran it through without dissent tomorrow, and Obama signed it Tuesday night or Wednesday, there'd be litigation by the end of the week that would stretch on for years, maybe even a decade.

What will be interesting to see is situations like the one in Texas, where the state AG has instructed court clerks with religious objections that they do not need to issue licenses for same sex marriages.  I wonder how that will play out; it should turn into a full blown constitutional crisis.

"Our task today is to tell people — who no longer know what sin is...no longer see themselves as sinners, and no longer have room for these categories — that Christ died for sins of which they do not think they’re guilty." - David Wells

Chip Van Emmerik's picture

GregH wrote:

 

Aaron Blumer wrote:

 

Thanks for beating me to this one. The absence of taxation is not subsidy. The money belongs to the individuals and institutions that earn it or receive it in donations. Allowing them to keep more/all of it is not subsidy. The distinction is not trivial.... and the loss of this distinction in public policy rhetoric has contributed a great deal to our culture of government overreach.

 

 

Yes and no. No one has the right to all the money they earn; that is conservative propaganda.

This is absolutely false. The U. S. was established in part on the concept of individual freedom. It was the purpose of the government to protect and serve those freedoms. Until the 16th Amendment was passed in 1909, the American citizen had absolute control over every single penny he made. All taxes were based on transactions which the citizen was free to choose to enter or reject - such as sales tax, import/export tariffs, or property taxes. Didn't want to pay taxes? Fine, don't buy property and make your own things from scratch. The point is that it was totally up to you what happened with every penny you made. ALL INDIVIDUAL TAXES ARE GOVERNMENT ENCROACHMENT ON PERSONAL LIBERTY. And, in this case, the church tax exemption has never been a subsidy. That money does not belong to the government; it belongs to the churches. 

Why is it that my voice always seems to be loudest when I am saying the dumbest things?

GregH's picture

It is absurd to take the position that one should get the numerous government services he receives and should not have to pay a dime for them. That is simply freeloading and to come to that viewpoint, you have to have listened to a few too many conservative talk show hosts in my opinion.

dcbii's picture

EditorModerator

GregH wrote:

It is absurd to take the position that one should get the numerous government services he receives and should not have to pay a dime for them. That is simply freeloading and to come to that viewpoint, you have to have listened to a few too many conservative talk show hosts in my opinion.

I don't actually know anyone that takes the position that we should get government services and "not have to pay a dime for them."  That's not to say that such people don't exist, but I don't believe that that is anywhere near a majority opinion even among those who listen to conservative talk show hosts.

That said, I think the problem conservatives have with the opposition is that many of the "high tax" types have actually stated that we shouldn't look at this as payment for services rendered.  I have no problem paying for trash service, police, driving on highways and bridges, national defense, etc., or in short, any services I actually use or *directly* benefit from.  It gets much more complicated when we talk about paying for things that directly benefit someone else, and from which I receive only some intangible benefit (like paying welfare to those who are capable of work to essentially avoid having a French-revolution-style revolt).

And to the point of how to collect taxes, I would definitely be in favor of changing over our system to a consumption-only system.  Yes, that would mean sales taxes would would be generally very high, but as has been said above, that would still mean I would *choose* to engage in transactions that cost me money, and even with a 30% sales tax, I wouldn't be paying taxes directly on income.  And it would be quite simple to make the basics of life tax-free so that the truly poor wouldn't pay anything.  Those that choose to purchase luxury food, go to restaurants, movies, or sporting events, drink alcohol, smoke, etc. as well as even buy expensive Nike tennis shoes would pay the taxes on those.  Most rich do not choose to live like Ebenezer Scrooge, so they would pay as well, and although I'm not sure what I think of it, the sales tax on luxury items like yachts (as opposed to working craft like fishing boats) could be made an increasing percentage as the price increases over something like $1,000,000.  But again, the taxes would come from transactions we choose to engage in.  If we choose to save, we wouldn't pay until we use that money.  Not only do I think this would be more fair, it would encourage good habits like saving.

To the actual point of the original post, I still believe that religious and charitable organizations give more to society than they take, so tax exemption (not "subsidy") is still a good investment.  We should do more with the community to show them that rather than simply disappear into our bunkers and lament the state of society.

Dave Barnhart

pvawter's picture

GregH wrote:

It is absurd to take the position that one should get the numerous government services he receives and should not have to pay a dime for them. That is simply freeloading and to come to that viewpoint, you have to have listened to a few too many conservative talk show hosts in my opinion.

Don't forget that the individuals who make up the local church are all paying taxes for those public services, so it's not exactly freeloading.