Should Churches Be Taxed? The Debate on Tax Exemptions and Reinvestment

[Evo]

Why "especially churches"? Harvard is sitting on a $30 billion endowment. My homeowners association has a hundred thousand in a reserve fund.

Churches because of the ease of financial fraud. Perhaps they are no worse than most other non-profits that receive donations, but it seems harder to investigate church finances, IMO, from what I've read. I don't have time right now, but there is a huge scandal with the Catholic church, fianancial scandals in Evangelical churches. Recently, the huge church complex behind where I live closed over millions of dolars that went *missing*. Of course I need to provide sources.

I'll just post some links for now. This first is the main one I am concerned with.

Do you know how your church -- or the megachurch down the street -- spends its tax-exempt money? Do you know how much tax-exempt compensation your pastor receives or how he or she spend their money?

Shouldn't you know? Shouldn't the the government to find out for you?
Those are some of the intriguing and unsettling questions raised by a must-read staff review released last week by U.S. Sen. Charles Grassley (R-Iowa).
The 66-page report, filled with references to nearly every major religious figure in America from Billy Graham to Jerry Falwell to Rick Warren, concludes Grassley's three-year investigation of six media-based, multi-million-dollar "ministries."

What is a church?

"Currently, anyone can set up an organization, call the organization a church, solicit tax-deductible contributions, and -- unless the organization voluntarily applies for recognition of tax-exempt status or files annual returns - that organization will be invisible to the IRS and operate virtually without government oversight because no state requires religious organizations to register and file annual financial reports with the state attorney general," the staff reported.

Under current tax law, religious organizations that are not churches are required to file IRS Form 990 and report their sources of income and expendutures annually.
Churches -- and organizations deemed "integrated auxiliaries of the church" -- are not required to do so.

"This lack of governmental, independent or denominational oversight is troubling when considering that churches can reach the size of large taxable corporations, control numerous taxable and non-taxable subsidiaries, and bestow Wall Street-size benefits on their ministers," the staff reported.

http://onfaith.washingtonpost.com/o...ch_who_is_minister_should_tax_man_decide.html

These other links just discuss financial scandals.

http://www.spiegel.de/international...threatens-catholic-church-image-a-842140.html

http://blogs.vancouversun.com/2012/07/22/evangelical-church-in-14-million-financial-scandal/

As well as questionable financial management, the church also suffers from fraud and embezzlement, according to Jason Berry, an expert in Catholic finance and author of “Render Unto Rome: The Secret Life of Money in the Catholic Church”. In March the former chief financial officer of the archdiocese of Philadelphia was arrested and charged with embezzling more than $900,000 between 2005 and 2011. Hundreds of priests have been disciplined for taking more than a little “walking around money” from the collection basket.

Muni bonds are generally tax-free for investors, so the cost of borrowing is lower than it would be for a taxable investment. In other words, the church enjoys a subsidy more commonly associated with local governments and public-sector projects. If the church has issued more debt in part to meet the financial strains caused by the scandals, then the American taxpayer has indirectly helped mitigate the church’s losses from its settlements. Taxpayers may end up on the hook for other costs, too. For example, settlement of the hundreds of possible abuse cases in New York might cause the closure of Catholic schools across the city.

http://www.economist.com/node/21560536

 

[Czcibor]

Evo:

Aren't you placing here a few separate subject into one topic:
1) Vatican finances - it's an independent country, able to regulate it's own internal affairs, so I don't see how it is related to US taxation. (Though after FACTA, I'm not sure whether US tax authorities notice that there are indeed independent countries)
2) Mess in finances of many churches and embezzlement of their own funds. It's noble of you that you want to help them combat that, however, that's also a different subject.

 

[Evo]

Evo:

Aren't you placing here a few separate subject into one topic:
1) Vatican finances - it's an independent country, able to regulate it's own internal affairs, so I don't see how it is related to US taxation. (Though after FACTA, I'm not sure whether US tax authorities notice that there are indeed independent countries)
2) Mess in finances of many churches and embezzlement of their own funds. It's noble of you that you want to help them combat that, however, that's also a different subject.

Actually, the OP doesn't restrict the subject of taxes to the US, and the financial problems are relevant to the overall secrecy behind church finances and is related, IMO.

 

[turbo]

Why shouldn't churches be taxed? Churches rely on public infrastructure just like every other business. Roads, bridges, water, sewage, electrical supply, communications... All paid for by the taxpayers. I can see churches being exempted from taxation on reasonable expenses for personnel, maintenance, and charity work, but a blanket exemption is just too much, IMO.

 

[Jack21222]

Why shouldn't churches be taxed? Churches rely on public infrastructure just like every other business. Roads, bridges, water, sewage, electrical supply, communications... All paid for by the taxpayers. I can see churches being exempted from taxation on reasonable expenses for personnel, maintenance, and charity work, but a blanket exemption is just too much, IMO.

I think the biggest reason has been gone over and over in this thread... churches don't have profits to tax. If run correctly, even if you wanted to tax them, there'd be nothing there.

Now in reality, I suspect churches and many other non-profits have creative ways to take money out of the business. For other non-profits, they have to file paperwork to keep everything straight. Churches are exempt from filing paperwork. Their books are completely hidden.

 

[Evo]

Yeah, we've gone 10 pages and we've covered the same points repeatedly, time to put the thread out of it's misery.