# Should the church be taxed?

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russ_watters
Mentor
Who is "we"? Looks to me like about half of the posts in the thread are talking about the connection.

But there is so much shooting from the hip in here, so little connection to reality. Here's the law on churches as non profits: http://en.m.wikipedia.org/wiki/501(c)_organization#section_1

Now, if we revoke the tax exempt status of churches because they don't do enough charity, what does that say for the other organizations on that list?

I don't think it is reasonable to dis-allow a charity from doing marketing. We'd never do that to the Red Cross or United Way.
Any non-charitable income of the Church (that is, that isn't provided for charitable causes - spreading religion is *not* a charitable cause at all) should be taxed at a medium rate of about 35%.

Now, if we revoke the tax exempt status of churches because they don't do enough charity, what does that say for the other organizations on that list?
I haven't argued that churches should have to do charity in order to be a tax-exempt non-profit, so I am in complete agreement there. I do still maintain that they should have to file paperwork to prove they're non-profit (just like every other non-profit), and they should follow the rules barring them from endorsing political candidates (and when they break the rules, the IRS should enforce them).

I think it's a violation of the establishment clause to say religious non-profits are exempt from filing while secular non-profits aren't.

I haven't argued that churches should have to do charity in order to be a tax-exempt non-profit, so I am in complete agreement there. I do still maintain that they should have to file paperwork to prove they're non-profit (just like every other non-profit), and they should follow the rules barring them from endorsing political candidates (and when they break the rules, the IRS should enforce them).

I think it's a violation of the establishment clause to say religious non-profits are exempt from filing while secular non-profits aren't.
All the non-charitable income should be taxed though. Even if you play a role as a non-profit charity but only use, say, 40%, or even 65% of that income for charitable causes then your non-charitable income should still be taxed. And all the funds dedicated to spreading religion, homophobia, etc. should be taxed equally at, say, a rate of 35%.

russ_watters
Mentor
All the non-charitable income should be taxed though.
Business income doesn't get taxed: only profit.

All the non-charitable income should be taxed though. Even if you play a role as a non-profit charity but only use, say, 40%, or even 65% of that income for charitable causes then your non-charitable income should still be taxed. And all the funds dedicated to spreading religion, homophobia, etc. should be taxed equally at, say, a rate of 35%.
I have to disagree with this, because the rules would get complicated and I can imagine some grey area about exactly what spreading your religion is. Just treat all 501c3 organizations the same.

No, I do not think churches should be taxed.
This.

Not all non-charity related funds are spent on missionaries. I can write about the local RC church here on our block-- masses are free though most people donate a few dollars here and there. To my understanding, most money is redistributed back into society through the priest- I believe some people in need might get cash, others get free food. Russ Watters mentioned Red Cross -- while I agree with him on most points, Red Cross does not really help people on the street in thus city but church does. Winters here in upstate NY are tough.

I am not sure I would tax a local church when the priest does not have enough money to fix the roof.

On the other hand, when one looks at the opulent city of Vatican, one gets doubts about money flow.

This is a tough nut to crack, really.

Ben Niehoff
Gold Member
Business income doesn't get taxed: only profit.
This I didn't know. That changes the game a little.

Gokul43201
Staff Emeritus
Gold Member
Business income doesn't get taxed: only profit.
Do you think churches should be exempt from having to file paperwork to show they have zero business profit?

A church is a non-prophet?

russ_watters
Mentor
Do you think churches should be exempt from having to file paperwork to show they have zero business profit?
Meh, dunno. I can see the IRS wanting to reduce their paperwork and they wouldn't get much out of having such paperwork filed. Is that really a big issue though?

There is a good reason why you would treat a church differently from, say, the Girl Scouts: Churches are mostly self funded while the Girl Scouts operates much more like a business, drawing substantial income from selling products.

As I said before, people (not you specifically) are really shooting from the hip here, having no idea what they are talking about and just making stuff up as they go. I can't fathom what people are envisioning a church's finances look like, but most of this discussion is nonsensical, or at best, just inapplicable. We're discussing baseball, but talking about touchdowns and baskets and penalty kicks.

I think the problem here is people just have no idea how a corporations work and what the tax implications are.

For example:

My homeowner's association is a 501c corporation...and we don't do any charity. If there's money left over from our landscaping and snow removal at the end of the year, where do people think that money goes? Even if it got distributed to the homeowners, it would just be a rebate of fees paid. In reality, it goes into a fund for next year.

Our association has no 3rd party "owners" who could take our profits, if such profits existed.

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Our association has no 3rd party "owners" who could take our profits, if such profits existed.
But churches are different, particularly so-called "mega-churches" down south. Or the church of Scientology. There are plenty of people that could pocket large amounts of profit from a church.

I still maintain it's a violation of the establishment clause to give churches special benefits over similar secular organizations.

DavidSnider
Gold Member
There is a good reason why you would treat a church differently from, say, the Girl Scouts: Churches are mostly self funded while the Girl Scouts operates much more like a business, drawing substantial income from selling products.
We're not talking about honest-to-goodness local churches that use the funds to keep a roof up. We're talking about megachurches, like Creflo Dollar or Scientology. It's a whole different ball game.

russ_watters
Mentor
Who is "we?" The OP says nothing about megachurches. And just who do you guys think might be profiting? Jack, you say they are different: HOW?

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russ_watters
Mentor
What point should I be getting from that link?

Jack, you say they are different: HOW?
How is a church different from a homeowners association? You said that your homeowners association has no owners that could take a profit if such profits existed. Churches do. I thought that was very obvious.

If you want specific examples of somebody who could potentially take profits out of a church, consider Craig Groeschel. Now, I am NOT accusing him specifically of doing any such thing, but it is an example of a person who would be in a position to do something if he were unethical, unlike your homeowners association who has no such person.

russ_watters
Mentor
Churches have owners beyond just the members? Can you substantiate that? WHO are they? No, it most certainly is not obvious: it flies in the face of what churches are.

And I see nothing in that wiki link to support the idea that the pastor profits from the church beyond his income. Are you saying he owns it? Can you prove it?

I think you are making assumptions about things you do not know here.

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Churches have owners beyond just the members? Can you substantiate that? No, it most certainly is not obvious: it flies in the face of what churches are.

And I see nothing in that wiki link to support the idea that the pastor profits from the church beyond his income. Are you saying he owns it? Can you prove it?

I think you are making assumptions about things you do not know here.
I'm saying he would have the ability to do so, as the founder of the church and senior pastor. He's basically in control of the church. By the way, if you had read my post, you would have seen that I was not accusing him of taking profits from the church beyond his income. I very specifically stated that he wasn't. I just said that he could siphon money off of the church if he wanted to. You know, maybe the "church" buys him a new Lamborghini for "church business" or something.

Once again, I am NOT accusing him of doing such a thing. All I am saying is that it's possible.

And because they don't have to make their finances available to the IRS like EVERY OTHER non-profit, he could easily do this and get away with it.

Here's an article from charitywatch.org which addresses this kind of thing: http://www.charitywatch.org/articles/Televangelists_Lack_Oversight.html

If you want a news source, here is something from USA Today: http://usatoday30.usatoday.com/news/washington/2007-11-07-televangelist-probe_N.htm

I'm not just making up hypothetical situations here. There are pastors right now that are apparently getting away with tax-free multi-million dollar homes and Rolls Royces. And before you ask, no I cannot prove it, BECAUSE THEY'RE NOT REQUIRED TO FILE THEIR FINANCES. The churches being investigated by the senate told the government to go screw themselves, basically, knowing that nothing could be done.

Anyway, I can agree that this flies in the face of what churches are SUPPOSED to be, but it does NOT fly in the face of what these churches are.

DavidSnider
Gold Member
And I see nothing in that wiki link to support the idea that the pastor profits from the church beyond his income. Are you saying he owns it? Can you prove it?
That's exactly what MY link showed.

russ_watters
Mentor
You said:
Jack said:
You said that your homeowner's association has no owners that could take a profit if such profits existed. Churches do.
Grammatically, the second sentence is a claim that churches do have owners beyond the members. Are you saying that you didn't intend that there are additional owners, just additional people who could take a profit? That's not what ownership is or what profit is.

Saying that "he's basically in control of it" and could therefor steal money from the church is not a fundamental difference between him and my homeowner's association: My homeowner's association has a President who has a check book and who could write himself checks.

But none of that has anything at all to do with whether churches (mega or otherwise) should pay taxes. Moreover/as such, this has nothing to do with the IRS -- it isn't the IRS's job to look for civil fraud (the pastor in this hypothetical would be stealing from the members, not the IRS). The IRS is not some private accounting firm that audit's peoples' books to look for fraud or skimming. What you are suggesting would make the IRS a government sponsored accounting firm that would -- free of charge, I assume? -- provide financial audits to companies to help them ensure their staff isn't stealing from them. Wow, would companies ever love that!! Except for the private accounting firms who currently provide that service, of course! And taxpayers who would have to fund it.

I think, also, you are under the false impression that non-profits file full-fledged tax returns that would provide the sort of information required do do such an audit. I'm pretty sure they don't -- I looked that up and IIRC, non-profits file a little form that states that they are non-profit and that's it. Filing that form to register as a non-profit is what churches are exempt from. I'll have to double-check that/get the link when I get home later, though.

russ_watters
Mentor
That's exactly what MY link showed.
Please provide a quote, because I'm not seeing it.

russ_watters
Mentor
And regarding the million dollar homes and cars, Jack: how do you know if you say no proof exists?

We have standards here, guys. You can't just fling carp at the wall an hope they stick. You need to substantiate - and explain - your claims.

DavidSnider
Gold Member
My example was too sketchy as they closed the inquiry prematurely. Let's go to a more clear cut example.

http://en.wikipedia.org/wiki/Peter_Popoff#Financial_details

In 2003, Popoff's ministry received over $9.6 million and by 2005 the amount had risen to over$23 million. In that year he and his wife were paid a combined total of nearly $1 million, while two of his children were receiving over$180,000 each.[37] Financial data is not available for Popoff's ministry following 2005 because Peter Popoff Ministries changed from a for-profit business to a religious organization in 2006, making it tax-exempt.[38] Popoff purchased a home in Bradbury, California for \$4.5 million in 2007.[39][40] He reportedly drives a Porsche and a Mercedes-Benz.[41] Some reporters are urging those who have donated money to Popoff in hopes of receiving "miracles" to report to the Attorney General in their state.[8]