Tax-free Churches? There’s No Such Thing!

You pay what churches don’t! US churches* received an official federal income tax exemption in 1894, and they have been unofficially tax-exempt since the country’s founding. All 50 US states and the District of Columbia exempt churches from paying property tax. Donations to churches are tax-deductible, making for a double-dip loss of revenues by the government. They are not tax free. YOU pay their taxes.

Grant’s prophecy prediction (below) seems to be off by at least a couple hundred years. We can poke fun at that, or see if there’s any sense in the rest of the quote:

I would call your attention to the importance of correcting an evil that, if permitted to continue, will probably lead to great trouble in our land before the close of the Nineteenth century. It is the acquisition of vast amounts of untaxed church property…. In a growing country, where real estate enhances so rapidly with time as in the United States, there is scarcely a limit to the wealth that may be acquired by corporations, religious or otherwise, if allowed to retain real estate without taxation. The contemplation of so vast a property as here alluded to, without taxation, may lead to sequestration without constitutional authority, and through blood. I would suggest the taxation of all property equally, whether church or corporation.” (Ulysses S. Grant, 18th U.S. President [1869-1877], Message to Congress, December 7, 1875; Congressional Record, Vol. 4, part 7, page 175; from George Seldes, ed., The Great Quotations, Secaucus, New Jersey: Citadel Press, 1983, p. 288)

In a sense, an unrestricted religious or corporate leader could exercise multiple votes—his own, plus whatever he could influence from his employees or congregation from his power position. That said, why are religions allowed property-tax exemptions? I would suppose the threat of taxation had been expected to keep them from acting like ordinary people with an interest in the works of government, and so would prevent religious groups’ hands from interfering. It appears that cannot work without a government agent posted in every edifice during every meeting to assure complete adherence to the law. That would happen only at great expense and set a regrettable precedent.

The various layers of government perform many necessary functions for which they prepare annual budgets. Many of those layers suffer deficits even while billions are handed out to religious and corporate enterprises for questionable reasons. Overall, our government seems senselessly generous with our money, with both parties equally guilty. Allowing massive acreage to go untaxed while some favored enterprise holds the title is but one example. The government should maintain titles to all properties from which it does not collect full taxes, and collect rent otherwise.

The following quote inspires questions about how it leads to governmental interference in religion, still at taxpayer expense:

The government has leverage on religious groups because of the tax-exemption privilege. Church leaders, eager for the church to be free to be the church, should ask for the removal of this privilege. If there were no tax privilege for religious groups, hucksters and people who are using religion as a cover for political movements would be discouraged.” (William Stringfellow, lawyer and lay theologian, as quoted in the Dallas Times Herald, December 9, 1978, p. A-27, according to Alan F. Pater and Jason R. Pater, compilers and editors, What They Said in 1978: The Yearbook of Spoken Opinion, Beverly Hills, CA: Monitor Book Co., 1979, p. 447.)

Religious institutions take undue advantage of their tax-free status when they invest in property that far exceeds their needs and become rentiers. I believe it’s obvious that making investments is an activity the scope of which is outside of what can be considered ‘religious’, in the same way as is a pastor’s earnings at a job, for which he is (or ought to be) taxed the same as anybody else. In my opinion, the grounds immediately surrounding the religious or corporate edifice for a reasonable distance (which others must determine, that may allow for expansion, the inclusion of a graveyard maintained by the members, a parsonage, etc.) and that all other properties are expected to produce eventual income outside their normal religious purview.

The quote expects religious leaders (and the government) to do the right thing: the leaders who wish to involve themselves in political activism to renounce their special status and pay taxes like everybody else, rather than yield to temptation and break the law. And, the government to hold their feet to the fire and actually impose fines and demand taxes when they do break the law. Otherwise, the government acts as if to acknowledge the religious claim as correct, that God’s is the higher law, and that all the various kinds of preachers have a right to act upon their arrogant insistence of that as a fact beyond substantiation.

We must recognize the importance of this. Our country’s early churches insisted on, and backed, the wall of separation that kept the new government away from their business. A variety of moves took place early on to insert chaplains into congress and were rejected. Prayer in public schools is still a hot topic. Efforts to insert religious edicts into law (Tennessee voters just approved a sneaky attempt to control abortions via a constitutional amendment) continue to apply every possible twist of logic to their agenda toward preeminence.

I expect their freedom from taxation was intended as part of the “wall of separation” between religion and government. If that is not the case, I see no other legitimate purpose for it, and hate that it depends on voluntary self-governance by those whom, even in Ben Franklin’s /Tom Jefferson’s time, have shown themselves to be dishonest manipulators. According to former White House senior policy analyst Jeff Schweitzer, PhD, US churches own $300-$500 billion in untaxed property. [1] New York City alone loses $627 million in annual property tax revenue due to 9,500 churches being tax-exempt, according to a July 2011 analysis by New York’s nonpartisan Independent Budget Office. [2] [3] What affects citizens is the way they are expected to make up these losses from their dwindling wallets plus pay for all the giveaways to the already wealthy. It would better serve justice to impose the taxes, and to write into law exactly what actions are illegal for religious enterprises to engage in, what actions are illegal for the government, then actually enforce fines against that, and let the courts develop it from there.

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