News Should all religions in the US be tax-exempt?

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The discussion centers on the historical context of religious freedom in the U.S. and its evolution into tax exemptions for religious organizations. Concerns are raised about the financial impact of these exemptions on local communities, particularly in Waterville, Maine, where valuable properties owned by churches contribute to high property taxes for residents. The debate highlights the disparity between small, community-serving churches and large megachurches that operate like businesses without tax obligations. There is a call for greater transparency and uniformity in tax regulations for all non-profits, as current IRS rules allow churches to avoid financial disclosure. The conversation ultimately questions whether all religious organizations should maintain tax-exempt status, given the potential for abuse and inequality in the system.
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Our nation was founded on the principle that state-sponsored religion was a form of tyranny. Lots of people emigrated to North America simply because of religious intolerance in Europe. Indeed, some people in the colonies had to move because of religious intolerance on this side of the Atlantic.

Somehow, "freedom of religion" has morphed over the years to a view that religious groups are exempt from paying any taxes. The city of Waterville, Maine is in one heck of a bind because much of the most valuable property in town is owned by the Roman Catholic Church and although the church requires and receives services from the city, they pay no taxes. I only mention this city because it is geographically small and the tax exemptions granted to the church and to academic institutions (Colby College is a VERY rich college) cause the home-owners in that city to pay some very stiff property taxes.

To take a more national view, there are mega-businesses operating as if they are churches (generally fundamentalist Televangelist sects) though they draw donations from all over and don't seem to contribute much to the well-being of locals. They are businesses and they are not taxed because they "sell" intangibles, like faith.

At least local churches can run food drives and tag sales to help people who are homeless or down on their luck. There is a congregation in a very affluent area south of here that takes donations of non-perishable food, used appliances, furnishings, and clothing, and sells them in a thrift shop in my town, where there are certainly many, many people that need such bargains to get by. They have "specials" when you can come in on a given day and fill a large (30 gal) plastic garbage bag with clothing and pay $5/bag. Lots of unemployed people are getting their school-shopping done this way, and buying work-clothes this way.

Some churches do a lot of good and serve local needs, and some are run as for-profit businesses that make their leaders a pile of money. Should they all be exempt from taxation? If so, why?

Background: When I was a kid, my great-aunt and great-uncle from Hartford used to tell me stories about being dunned for donations at their church because "poor French-Catholics from Maine" needed help (the French population of Hartford was largely from Maine, and they moved down to take jobs at Colt, Pratt-Whitney, etc). Even as a small kid, I couldn't help but contrast this with the "missionaries" that would visit our small church several times a year and tell us that we had to give more money because poor people in Latin America or Africa needed help. At what level would the church stop begging? I certainly don't know. Most of the Catholic kids in my town were in large French-Canadian families, and most didn't have inside toilets in the '60s and many didn't have running water. A hand-pump at the sink and a bucket to heat water on the wood stove was pretty standard.
 
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To answer the question, yes. All non-profits as qualified by the IRS should be tax-exempt. Many of your small town local churches that are supported directly by the local community would simply fold if they had to pay taxes on the meager offerings they recieve. I know mine would. All that would be left is mega-churches that could afford a tax. That would suck for the small town folks.
 
Churches are not required to file proof that they are non-profit. Per IRS rules, they do not need to file financial paperwork like every other non-profit.

I think that needs to change. What are some churches, especially these megachurches, trying to hide?
 
turbo-1 said:
Some churches do a lot of good and serve local needs, and some are run as for-profit businesses that make their leaders a pile of money. Should they all be exempt from taxation? If so, why?
Isn't any money (salary, etc) made by its leaders subject to personal income tax? The church itself makes no profit, but presumable pays salaries to many, including its managers, which should be reported as salary.

As far as property taxes, I don't see any reason a local government couldn't levy a property tax on the property, based on the value of the property, but that has nothing to do with church revenues or the IRS.
 
Jack21222 said:
I think that needs to change. What are some churches, especially these megachurches, trying to hide?

I'm afraid its a bit of a slippery slope. Who decides which churches have to pay taxes, and which do not?

To the extent that such application is not uniform with respect to religious content, it would be unconstitutional on its face, since a tax break for some churches and not for others is a de facto establishment of state-subsidized religion. Even if you tried to make the regulation content-neutral, it would never be neutral in practice (the wealthiest churches in the US are almost certainly Christian, for example).

Either everybody pays tax, or nobody does.
 
drankin said:
To answer the question, yes. All non-profits as qualified by the IRS should be tax-exempt. Many of your small town local churches that are supported directly by the local community would simply fold if they had to pay taxes on the meager offerings they recieve. I know mine would. All that would be left is mega-churches that could afford a tax. That would suck for the small town folks.

This is a bad thing? Really? I think the small community would be better off.
 
zomgwtf said:
This is a bad thing? Really? I think the small community would be better off.

based on what?
 
zomgwtf said:
This is a bad thing? Really? I think the small community would be better off.

Better off going to a mega-church? Please explain.
 
Al68 said:
Isn't any money (salary, etc) made by its leaders subject to personal income tax? The church itself makes no profit, but presumable pays salaries to many, including its managers, which should be reported as salary.

As far as property taxes, I don't see any reason a local government couldn't levy a property tax on the property, based on the value of the property, but that has nothing to do with church revenues or the IRS.

No, the money made by a typical pastor is not taxable. But, he also does not pay into SS. I only know this because I used to be on the stewardship board of a small church that was basically on a shoestring budget all that time.
 
  • #10
talk2glenn said:
I'm afraid its a bit of a slippery slope. Who decides which churches have to pay taxes, and which do not?

To the extent that such application is not uniform with respect to religious content, it would be unconstitutional on its face, since a tax break for some churches and not for others is a de facto establishment of state-subsidized religion. Even if you tried to make the regulation content-neutral, it would never be neutral in practice (the wealthiest churches in the US are almost certainly Christian, for example).

Either everybody pays tax, or nobody does.

The application right now isn't uniform. Some non-profits need to file paperwork, some don't. I'm arguing we should make it equal, so no one non-profit is favored regardless of religion.
 
  • #11
I'm not convinced by any of the posts so far that there is even an issue here.
 
  • #12
drankin said:
I'm not convinced by any of the posts so far that there is even an issue here.

We don't know if there is an issue because churches can operate their finances in secrecy.
 
  • #13
Jack21222 said:
We don't know if there is an issue because churches can operate their finances in secrecy.

Secrecy from who? They still have to file with the IRS on an annual basis.
 
  • #14
Proton Soup said:
based on what?

Based on them having no church so more people would probably not attend and be brainwashed/indoctrinated. Simple.

As well what the hell is a 'mega-church'? Like a cathedral? Are you trying to say people are better off going to parishes than cathedrals? Why? Less travel time? I don't get it.

Anyways, the OPs question I'm pretty sure is about ALL religions. This includes say Scientology, something I highly doubt many people here support. Do you want to be supporting it financially? Highly doubt that too, personally I'd rather see all churches die off because they can't support themselves.
 
  • #15
drankin said:
Many of your small town local churches that are supported directly by the local community would simply fold if they had to pay taxes ...
zomgwtf said:
This is a bad thing? Really? I think the small community would be better off.
zomgwtf said:
Based on them having no church so more people would probably not attend and be brainwashed/indoctrinated. Simple.
To obstruct those who would try to tax churches out of existence is probably one of the main reasons for their tax-exempt status.



Turbo: Can you provide citation for your main concerns? It sounds more like rumor and fear mongering rather than confirmed fact.


I did some brief searching, and came across this document:
From page 3:

To qualify for tax-exempt status, such an
organization must meet the following requirements
(covered in greater detail throughout this publication):
  • the organization must be organized and operated
    exclusively for religious, educational, scientific, or other
    charitable purposes,
  • net earnings may not inure to the benefit of any
    private individual or shareholder,
  • no substantial part of its activity may be attempting
    to influence legislation,
  • the organization may not intervene in political
    campaigns, and
  • the organization’s purposes and activities may not
    be illegal or violate fundamental public policy.
 
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  • #16
drankin said:
No, the money made by a typical pastor is not taxable. But, he also does not pay into SS. I only know this because I used to be on the stewardship board of a small church that was basically on a shoestring budget all that time.
That does seem odd, considering that in general, wages or income from any source must be claimed. Do other church employees also not have to claim their income? Do you have a reference for this?
 
  • #17
Jack21222 said:
The application right now isn't uniform. Some non-profits need to file paperwork, some don't. I'm arguing we should make it equal, so no one non-profit is favored regardless of religion.

This is no longer true as far as I know. Congress made it so that all non-profits have to file a certain form. I remember reading an article last year about a tremendous number (40%?) were completely unaware that they were required to register with the government. The effort was in order to find illegitimate non-profits and non-profits that no longer existed to clean the books. I wish I remember the exact details, I don't even remember if it was this year was the first year they were all required to register or if it was last year...
 
  • #18
Secrecy from who? They still have to file with the IRS on an annual basis.

No, they don't

http://www.irs.gov/charities/churches/article/0,,id=132081,00.html

Generally, tax-exempt organizations must file an annual information return ( Form 990 or Form 990-EZ). Tax-exempt organizations that have annual gross receipts not normally in excess of $25,000 are not required to file the annual information return; they may be required to file an annual electronic notice, however. In addition, churches and certain church-affiliated organizations are excepted from filing.

Emphasis mine. I don't see why churches that bring in more than $25,000 annually should be exempt from filing. If you have a source that says they do need to file annually, I'd like to see it. My source is directly from the IRS website.

As an addendum, this is a story that demonstrates the need for some transparency.

http://www.npr.org/templates/story/story.php?storyId=16860611

Although the story is 3 years old, I don't believe megachurches have changed their ways much. Here is a key part of the story:

Grassley said there have been complaints about the pastors' extravagant lifestyles and questions about whether the churches' tax-exempt status is being abused. That includes the personal use of Rolls Royce cars, private jets and multimillion-dollar homes. Grassley is also looking into exorbitant salaries, so called "love offerings" or cash payments to ministers; a justification for layovers in Hawaii and the Fiji Islands; and in one case, the purchase of a $23,000 commode with a marble top.

"There's enough questions being raised that we felt it should be further investigated," Grassley told NPR.
 
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  • #19
Pengwuino said:
This is no longer true as far as I know. Congress made it so that all non-profits have to file a certain form. I remember reading an article last year about a tremendous number (40%?) were completely unaware that they were required to register with the government. The effort was in order to find illegitimate non-profits and non-profits that no longer existed to clean the books. I wish I remember the exact details, I don't even remember if it was this year was the first year they were all required to register or if it was last year...

I remember this too. I think it was passed 3.5 years ago and took effect 0.5 years ago, though I'm not sure on the exact dates. (I do think it was 3 years between.)



As for my views, I like churches but don't really think that they should be tax-exempt. I'm especially concerned about organizations like the Church of Scientology.
 
  • #20
Al68 said:
That does seem odd, considering that in general, wages or income from any source must be claimed. Do other church employees also not have to claim their income? Do you have a reference for this?

No, I was incorrect. They just don't have to pay into SS. The organization is not required to pay half of their SS like a typical business either.
 
  • #21
Jack21222 said:
No, they don't

http://www.irs.gov/charities/churches/article/0,,id=132081,00.html



Emphasis mine. I don't see why churches that bring in more than $25,000 annually should be exempt from filing. If you have a source that says they do need to file annually, I'd like to see it. My source is directly from the IRS website.

As an addendum, this is a story that demonstrates the need for some transparency.

http://www.npr.org/templates/story/story.php?storyId=16860611

Although the story is 3 years old, I don't believe megachurches have changed their ways much. Here is a key part of the story:

I stand corrected. They don't have to file at all whether they make more than $25,000 or not. I agree, I think they should file anyway. But I also think they should maintain their tax exempt status just as any other non-profit.
 
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  • #22
IRS said:
In addition, churches and certain church-affiliated organizations are excepted from filing.
drankin said:
They [pastors] just don't have to pay into SS. The organization is not required to pay half of their SS like a typical business either.
Does someone have an explanation for how these special exceptions exist for churches and can be justified without violating separation?
 
  • #23
drankin said:
I stand corrected. They don't have to file at all whether they make more than $25,000 or not. I agree, I think they should file anyway. But I also think they should maintain their tax exempt status just as any other non-profit.

I agree if and only if they meet the other criteria for tax exemption. If they break the rules, they should be able to lose their tax-exempt status just like any other non-profit organization. Right now, we don't have a way to pick out those bending the rules.
 
  • #24
Gokul43201 said:
Does someone have an explanation for how these special exceptions exist for churches and can be justified without violating separation?
I would be interested in how Harvard or Yale, (or Harrow or Eton) get to be tax free as well.
 
  • #25
I don't believe in their tax-exempt status. If I pay taxes, I don't want them to benefit for my work. I am their slave in one respect. This is an injustice.

Then again I would believe in their tax-exempt status if I can have it too. I invent a religion and have my house declared a tax-exempt parsonage. If they have it then I should have it too because my religion is just as good as theirs. Here is an injustice that prevents my tax-exempt status.
 
  • #26
mgb_phys said:
I would be interested in how Harvard or Yale, (or Harrow or Eton) get to be tax free as well.

They're tax exempt?!??!

Churches I can understand in spirit (no pun intended) considering they do soooooo much for the communities they are in most of the time (I've never heard of a government soup kitchen).
 
  • #27
And providing an education is what ... a worthless service?
 
  • #28
zomgwtf said:
Based on them having no church so more people would probably not attend and be brainwashed/indoctrinated. Simple.

sounds like you have a gospel truth of your own. maybe if you put out some signs, set up a tent and some chairs, people would come and listen to what you have to say.
 
  • #29
Gokul43201 said:
And providing an education is what ... a worthless service?

depending on the major...

but no, you pay to go to Harvard... you pay like mad.
 
  • #30
drankin said:
No, I was incorrect. They just don't have to pay into SS. The organization is not required to pay half of their SS like a typical business either.

i'm not sure of the details, but afair, the issue with taxes and how much gets cut from a pastor's pay depends on the denomination or choice of the minister. some churches, like the catholics, handle pastor(priest) retirement themselves, and take an exemption for that. and I'm thinking that maybe methodists do something similar. but your average freewill baptist pastor with a congregation of 40 people in a cinderblock church is probably not going to opt out of social security retirement. besides that, most small church preachers are working two jobs if you must know. they have their normal 8-5 in addition to preaching 2 or 3 sermons a week and maybe a sunday school class, too. so yes, the small guys are already paying taxes, at least on their full-time gigs.
 

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