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

[turbo]

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.

 

[drankin]

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.

 

[Jack21222]

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?

 

[Al68]

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.

 

[talk2glenn]

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.

 

[zomgwtf]

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.

 

[Proton Soup]

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

based on what?

 

[drankin]

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

Better off going to a mega-church? Please explain.

 

[drankin]

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.

 

[Jack21222]

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.

 

[drankin]

I'm not convinced by any of the posts so far that there is even an issue here.

 

[Jack21222]

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.

 

[drankin]

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.

 

[zomgwtf]

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.

 

[Hurkyl]

Many of your small town local churches that are supported directly by the local community would simply fold if they had to pay taxes ...

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

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:

http://www.irs.gov/pub/irs-pdf/p1828.pdf​

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.

 

[Al68]

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?

 

[Pengwuino]

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...

 

[Jack21222]

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.

 

[CRGreathouse]

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.

 

[drankin]

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.

 

[drankin]

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.

 

[Gokul43201]

In addition, churches and certain church-affiliated organizations are excepted from filing.

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?

 

[Jack21222]

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.

 

[mgb_phys]

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.

 

[Helios]

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.

 

[Pengwuino]

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).

 

[Gokul43201]

And providing an education is what ... a worthless service?

 

[Proton Soup]

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.

 

[Pengwuino]

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.

 

[Proton Soup]

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.

 

[zomgwtf]

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.

Interestttinggg... In fact if I had the time I would do it, only it wouldn't be a tent, it'd be a lake front cottage and tax-free, just like my wage.

Since you came off this way towards my post I assume you would also be of the opinion that schools teach 'gospel truth' too?

What a rediculous response this was.

 

[Proton Soup]

What a rediculous response this was.

don't feel bad

 

[Jack21222]

depending on the major...

but no, you pay to go to Harvard... you pay like mad.

If you can afford to, you do. I may be wrong about this, but I don't think Harvard keeps people out based on ability to pay. They give out a lot of financial aid.

In fact, I just went to their website. http://www.fao.fas.harvard.edu/icb/icb.do

Our new financial aid policy has dramatically reduced the amount families with incomes below $180,000 are expected to pay, and parents of families with incomes below $60,000 are not expected to contribute at all to college costs. We no longer consider home equity as a resource in our determination of a family contribution, and students are not expected to take out loans, which have been replaced by need-based Harvard scholarship. This new program has reduced the cost to middle income families by one-third to one-half, making the price of a Harvard education for students on financial aid comparable to the cost of in-state tuition and fees at the nation’s leading public universities.

I emphasized a few key points.

 

[turbo]

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:

http://www.irs.gov/pub/irs-pdf/p1828.pdf​

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.

The Archdiocese of Portland (controlling authority of the Roman Catholic church in Maine) spearheaded the drive to repeal Maine's same-sex marriage law. The church took special collections for Stand For Marriage Maine and organized petition drives to repeal the same-sex marriage law. They were not the only church to support SFMM and try to repeal the law, but they were the most prominent. Because they are a church, they are not subject to the same reporting that other politically-active organizations are. Googling "Diocese of Portland" and "anti-gay" for instance, will get you more hits than you'll ever care to read. Some of the more acceptable ones (per forum rules) are newspaper articles that are now archived and unavailable for free. I don't know the status of the lawsuit, but there was a suit filed aimed to remove the church's tax-exempt status because of their political activities.

The National Organization for Marriage funneled $1.9M into the Question 1 drive, and has refused to identify donors, like any other political organization that raises more than $5K to support a ballot initiative. So while the church was providing untraceable cash donations and "boots on the ground" to collect petition signatures, NOM was shoveling money, and still intends to keep the money untraceable. They have refused to identify donors, and claim that they will appeal all the way to the Supreme Court.
http://www.kjonline.com/news/anti-gay-marriagegroup-seeks-endto-fundraising-probe_2010-06-20.html

 

[zomgwtf]

How come buildings of god(s) need to be tax-exempt anyways? I'm sure that if the revelations given by the church were true and useful the building would continue to exist regardless of taxes?

I don't think it's a valid argument that we need to not tax churches in order to save them from dying off. If religions are going to die off then obviously they aren't worthy of continued existence, we shuldn't give them a break. In fact they should have the TOUGHEST times because they have the most to prove.

I don't think religious buildings should be compared to educational buildings or charities for the simple reason that one indoctrinates a faith and one is truly just trying to help society without bigotry or special treatment to certain people based on belief. If you think churches should be tax free based simply on the fact that they 'help out in the community' then why don't you start a rotary international club in your community? Or the lions one? Even freemasons?

 

[Hurkyl]

The National Organization for Marriage ...

Your beef with political action committees belong in another thread where they aren't obscuring what is ostensibly the topic of this thread -- tax-exemption as it relates to religious groups.

 

[turbo]

Your beef with political action committees belong in another thread where they aren't obscuring what is ostensibly the topic of this thread -- tax-exemption as it relates to religious groups.

Please feel free to move the post or delete the reference to NOM if you wish. My point is that the church provided manpower and cash (about 1/2 million dollars) to get proposition 1 on the ballot and they were aided by some very wealthy out-of-state donors. It appears that the church was acting as a PAC, in violation of the IRS rules regarding tax-exempt status.

 

[turbo]

I dug around archived materials for a bit, and have found that as of 2007, 35% of the property in the city of Waterville, ME was tax-exempt. My wife and I would have liked to live there at one point, but the property tax rate was excessive. That 35% is not all owned by religious groups. There are two well-heeled private colleges and 3 hospitals in that city, as well as some parochial schools.

 

[Hurkyl]

Really, I think I'm totally confused as to what your point is.

Let me ask a specific question: do you have any objection to a religious group being tax-exempt if they adhere to the bullet points I quoted?

If not, then I think the topic is settled?

 

[turbo]

Really, I think I'm totally confused as to what your point is.

Let me ask a specific question: do you have any objection to a religious group being tax-exempt if they adhere to the bullet points I quoted?

No.

But as I have tried to show, the church funneled money into a political campaign against same-sex marriage and organized the faithful to collect petition signatures for the purpose of overturning a law passed by the legislature and signed into law by the governor (who is himself Catholic, BTW). That level of political activism is specifically banned in the list of bullet-points you posted. I bolded the two points that were most relevant to the discussion.

 

[turbo]

At some point, I think we have to re-think the granting of tax-exempt status to religious groups that engage in political activism. Tax-exemptions for religious groups doesn't logically flow from the separation of church and state, IMO. The Prop 1 campaign of 2008 was just one glaring example of why some groups may not deserve tax exemptions.

 

[Evo]

I don't mind if the charitable functions of a religious group are tax exempt, but I see no reason why a religious organization should be tax exempt.

Some religious groups do great charitable work. Many do not do anything charitable or even help in their local community. Why, exactly, should these people be tax exempt? I think it's time to stop the blanket tax protection for anyone that calls themself a religion. It's ridiculous how easy it is to proclaim yourself a religious organization.

I'm a bit bummed, my scapular says "made in China", my best friend bought it for me at her catholic church. A bit off topic, I found it while unpacking some boxes from my recent move. Why are they outsourcing the manufacture of Christian religious objects to China of all places? I doubt the factory is Christian.

Surely the church could have opened a little workshop for some local handicapped or homeless people to print these up?

 

[Hurkyl]

I bolded the two points that were most relevant to the discussion.

If the bullet points are violated (and there is not some further relevant law), then they shouldn't get tax-exempt status. Case closed.

It's confusing to me that you seem to be putting a lot of effort into arguing that tax-exempt status should not be granted to organizations that the law says should not be granted tax-exempt status. And that you are trying to turn it into an issue about religion.

 

[turbo]

Let me ask you if you feel that the Westboro Baptist Church deserves tax-exempt status.

 

[Hurkyl]

I have no idea.

Is it worth thinking about? I don't see why, if you're content with the laws that dictate whether or not an organization can have tax-exempt status.

 

[Hurkyl]

Well, turns out I'm up for a brief round of devil's advocate.

Their campaigns seem to target public opinion, spread the word, that sort of thing. So unless their message happens to fall in the realm where we the Government is allowed to legislate religious content, they start undertaking illegal activities, or they start operating for profit, then yes, they should enjoy a tax-exempt status.

 

[Gokul43201]

depending on the major...

And can one not similarly say " ...depending on the church, and depending on the nature of the specific services it provides ..."?

 

[Gokul43201]

Well, turns out I'm up for a brief round of devil's advocate.

Their campaigns seem to target public opinion, spread the word, that sort of thing. So unless their message happens to fall in the realm where we the Government is allowed to legislate religious content, they start undertaking illegal activities, or they start operating for profit, then yes, they should enjoy a tax-exempt status.

I agree. To the extent that any church deserves tax-exempt status, so does Westboro Baptist. So also, would any extremist madrasa that is careful about how it walks the legal line (by knowing and sticking within its amendment limitations).

 

[ThomasT]

Should they all be exempt from taxation?

No, they should all have to pay property, etc. taxes.

 

[turbo]

No, they should all have to pay property, etc. taxes.

My feeling, too. If an organization is a charitable enterprise, they can take a load off public services, and they deserve to be tax-exempt. I certainly don't think that the Salvation Army needs to be taxed because they do so much good, and they target their efforts locally, using volunteers, as much as possible.

Most churches do very little in this regard, apart from tag sales, etc. Why should they get a free ride? Local churches funnel money to their franchises, and the mega-churches make their pastors into millionaires with no accountability.

When you have large enterprises taking cash income and funneling it into unaccountable accounts, that is generally considered money-laundering by the Feds. Pull away the inviolable blanket of "faith" attributed to churches in the US, and there is a large underground economy that needs some attention.