Religion in America Is Big Business and Should Not Be Tax-Exempt

The New York Times has hosted an online debate to discuss the issue of religious tax exemption. This exemption is misguided and often abused, and in this time of fiscal scrutiny, should be discontinued.

The IRS has published A History of the Tax-Exempt Sector and in it they give the original justification for the policy - voluntarism.  They cite Alexis de Tocqueville: “I have frequently admired the endless skill with which the inhabitants of the United States manage to set a common aim and to persuade them to pursue it voluntarily”. Before there were public service programs – government-sponsored health care, education, and social welfare – churches provided these services, and still should.

One of the Times debaters cited Supreme Court Elena Kagan for another insight into government policy:

Religious groups provide a “critical buffer” against the power of government, and religious autonomy “has often served as a shield against oppressive civil laws.”

Churches and other tax-exempt institutions should remain free from the political influences of the government and the IRS.  Congress can change tax laws at any time, and if churches were not tax exempt, they might be subject to oppression:

In 1890, Kentucky State Representative Whittaker summed up the sentiment nicely when he said, “Let an untaxed Gospel be preached, in an untaxed church house, from an untaxed pulpit; let the emblem of a crucified, but risen Christ be administered from an untaxed altar, and, as the spire points heavenward, . . . let it stand forever untaxed.” (TownHall.com)

Another observer, a legal counsel for the Baptist Church has added yet another dimension:

The "intangible benefit" theory of tax exemption highlights the intangible and often unseen benefits provided by churches to the community -reduced crime rates resulting from transformed lives, suicides prevented when people surrender to Christ, and people with destructive behavioral patterns that harm the community changing into hard-working and virtuous citizens who contribute to the well-being of the community (TownHall.com).

I think that this last justification gets as close as to the real reason for continuing the exemption as any. America is one of the most religious nations on earth; and the evangelizing mission of most Christian churches should not only be protected, but promoted.

There are just as many arguments why churches should not receive tax exemption.  The Teapot Atheist debunks the myth of special status, saying they are nothing more than businesses:

They have salaried employees, mission statements, they compete with other churches for market share, many of them sell products, they own property, and some run profits in the millions. Some churches, like the Catholic and Anglican churches, closely parallel the franchise model…

The critic attacks the other principle of church exemption – good works – by saying that churches do very little in comparison with individuals and other voluntary organizations:

There are many large religious charities (like the Salvation Army) and secular charities (like Doctors Without Borders) that do all kinds of important charitable works, but individual churches by and large do not do anything on nearly such a scale.

OVO, an Oregon public interest group, summarizes the case against church tax-exemption:

Since there is no definition of religion to differentiate ‘real’ religious organizations from ‘fake’ ones, decision-making for or against tax exemption is arbitrary. As importantly, religious organizations rarely make contributions to their community that proportional to the amount they are awarded in tax breaks; nor are they held accountable for their programs.

Of these, the definition issue is by far the most important.  The Church of Scientology fought a long 26-year battle with the IRS, but in1993, the Church was awarded tax-exempt status because it convinced the courts that it was indeed, a church. The Church argued in court that it provided a much-needed spiritual refuge and offer of enlightenment.  The government argued for Christianity. 

Perhaps the strongest argument against church tax-exemption is that since churches are almost always political, they should not be tax-exempt.  The Catholic Church’s engagement with government on public policy (contraception), or the obvious and deliberate use of the fundamentalist Christian pulpit to rail against ‘socialism’, gay rights, family values, and individual liberties, are examples. 

The churches insist on their rights to view social and political issues through a religious lens.  Homosexuality, abortion, and contraception are against God’s law, so they are well within their rights to fight these issues. God’s law always trumps Man’s; but do churches step over the church-state line when they enter a public arena?

In 2007, Senator Charles Grassley initiated an investigation of six televangelists asking them to disclose their organization’s compensation plans, spending practices, assets and business arrangements. The investigation was prompted by complaints that these ministers live lavish lifestyles with multi-million dollar homes and private jets.

In 2011, Grassley concluded that he could find no wrongdoing because most of the ministries refused to voluntarily turn over documentation or appear before Congress. Grassley was unable to pursue his investigations largely because of the special status accorded to churches:

• Religious organizations do not have to prove they are doing charitable work and automatically receive tax exempt status from the IRS.
• Religious organizations do not have to inform the public what assets the organization has, what their annual income and expenses are, etc
• The IRS has special rules that make initiating an audit of churches, mosques, synagogues and other religious entities more difficult than with other secular nonprofits..
• K-12 schools run by religious organizations (Secular Coalition for America)

Religion in America is first and foremost a business – a big business – and it is afforded special status and protections that no other enterprise enjoys. 

In conclusion, since religion is a business, churches should no longer be afforded tax exemption.  If they are businesses, then let them compete like businesses.  Congregants should either throw extra change in the basket on Sundays to make up for taxes, or turn to low-budget discount store-fronts.  This alternative would challenge the most suspect mega-churches while allowing religion to flourish and would force churches to compete in the do-good marketplace