So Freedom Sunday has come and gone. I didn’t hear anything on the news this morning about whether or not major changes are in the works, but I’d like to hear from the MoF crowd about this. Should churches be tax exempt or free to use their spiritual influence to exert political influence (and pay taxes)?

Some background: the Alliance Defense Fund, fed up with their lack of power and voice as members of the Christian minority in this increasingly secular society, came up with the Pulpit Initiative, a civil disobedience/protest against the separation of church and state in the body of the tax code, which disallows advocation of particular candidates by organizations with tax exempt status.

My understanding about how this tax exemption works is that churches do not pay property taxes for church property (which may extend to rectories and hospitals, I’m not certain). Additionally, they do not pay income tax because it is assumed that they do not turn a profit. Again, this is my understanding and I would be happy to have someone who understand the tax code better than I correct me.

Apparently, the major argument on this subject goes something like this: if we are exempting churches from taxation because of a benefit to society (as a charitable organization), maybe we want to reconsider and examine the assumption that religion is a benefit to society; if we are, however, exempting churches from taxation because they are nonprofits and it would be unfair to tax an organization that does not make money, it may be that tax exemption for churches makes sense.

To the first part, the benefit to society that is being focused on is a church’s secular charitable actions (blood drives, money to the poor, marriage counseling services) not a church’s religious “benefits” (provision of marriage, weekly moral instruction, baptism of your dead relatives). In which case, I would like to take a look at what kinds of secular charitable actions a particular church participates in. Does the tithe money really go to (a) fund the church and then to (b) provide charitable services to the local community regardless of their religious proclivities and without prosthelyzation? If they do not, I would agree with a serious reconsideration of the tax code. Of course, if this is our reasoning, we would need to take a look at what we consider to be charitable “benefits”. Selling used clothing? Substance abuse management? And how far may a religious organization go toward promoting their own moral code in exchange for these services? Is the government okay with someone providing these services (because then they don’t need to), no matter what? Can the government (reasonably, legally, or morally) restrict provision of these services to ensure that the government (by not taxing religious institutions that provide charitable services) is not advocating prosthelyzation of religion?

To the second part, it is generally considered that non-profits ought not be taxed. PBS & NPR are untaxable because they run at a loss or simply break even. Can the same be said of churches? All churches? There are certain churches which clearly have plenty of money lying around, but there are many that are simply struggling to survive. Is “non-profit” a valid distinction for a religion? Certainly we would hope that religions are not concerned with turning a profit, but does turning a profit mean that they are no longer a valid church? If that profit was put back into the “business”, as most would do—building a larger church, increasing staff, buying bibles for hotels—does it count as “profit”? If it does not, there are many businesses which might be able to claim “non-profit” status.

I recently heard an argument about why the government “would never” deny tax exemption to (Catholic) churches—because thousands hospitals across the country would suddenly close. I’m not certain that churches still maintain that kind of contact with their daughter hospitals (even the obviously ‘religious’ ones: St. Jude, Providence, &c.), but at least there is one argument for allowing churches to keep their tax exempt status.

It is widely acknowledged that religions “do” charity better than do atheists. I would submit that this is a function of the built-in community, hierarchy, and organization that a religion affords. There are many (and more every day) charity organizations that have no affiliation with religion and others that are so old that one forgets their affiliation with religion. That said, currently most atheist grounds do have tax exemption on the grounds of being non-profit. Many proponents of keeping the tax-exempt status for churches tend to compare their church with atheism. I think, however, that the best comparison would be to compare their church with their least favorite church (be it an Islamic church or a Pagan church—those are generally the two “hated” churches).

My hope is that, in a post-Pulpit Freedom Sunday, whoever chose to participate gets fined and thoroughly audited with serious consideration to lose their tax exempt status. I also hope that it starts a national conversation about tax exemption for (which can equal protection and therefor promotion of) religion.