Is tax-free status for churches establishment of religion?

Question

How can we justify in a secular society allowing a group to own properties and investments for private benefit, without paying their fair share for the public services needed to support them?

Did religious groups ever perform a public function that justified them being subsidised by the state?

How do religious people feel about their organisation being registered, licenced and financially supported by the power of this world?

history, if churches perform charitable functions, those parts of their operations should absolutely be tax-exempt as a charity and I see nothing stopping churches taking advantage of that.

shaolt, could you explain what public purpose is served by churches, as churches, rather than as a particular fund-raising structure for activities that could be carried out by any organisation religious or otherwise?

As has been pointed out, I'm not an accountant. Let me see if I understand this non-profit thing.

Suppose I establish an organisation that has no corporate structure, no decision-makers but me (or me and a group of my friends, it's not a vital distinction), and that spends 100% of its income on the company HQ, throwing weekly parties and paying me a full-time salary. That makes no profit, right? I can write off the organisation's taxes, right?

Wrong. Not one cent. If I lose money, that's my silly fault.

Churches are tax-exempt because their income is spent on a _charitable purpose_. Tax legislation defines what are such purposes. In this case, "promotion of religion" is considered to be a charitable purpose.

So the reason that churches are tax-exempt is that legislation defines the activity of a church as a public benefit. QED.

If I'm missing anything, please say.

Answer 1

Actually you got it totally the wrong way, the tax exempt status downgrades the role of the church in public life. You see before and for some time after the constitution was established, there would be mandatory tithes paid to support a particular church, typically a Protestant church, but in the early 19th century states began granting taxpayers the option of selecting which denomination their taxes would support. Eventually this was basically ended, and since churches were not funded by taxpayer money any longer, they were consequently given tax breaks. Religion ultimately serves public, as is evident by the 1787 Northwest Ordinance passed by Congress declaring, "Religion, morality, and knowledge, being necessary to good government and the happiness of mankind, schools and the means of education shall be encouraged". Now here is the thing - the founders did NOT see the church as a public institution, because that would mean the church is bound to the government and owes its allegience to the government. But by having separation of church and state, the church was actually considered a PRIVATE establishment, albeit one that serves public wants, but still one that is privately, and not government owned. Article 1 Section 10 of the Constitution promises that private establishments (such as the church) cannot be interferred with by the government, thus separation of church and state is secured in Article 1 Section 10 of the Constitution. The church is a private establishment, one that serves public needs yes, but not one that can be manipulated by the government.

Article 1 Section 10 mandates that an institution serving public needs cannot be expected to be supported only by private funds. In other words a privately owned medical center cannot be expected to serve the community only by private funds, so they are given tax breaks.

Answer 2

They're not financially supported because they don't pay taxes. They have a tax-exempt classification similar to charities and other non-profit organizations. I would hope that I don't need to point out to you the often vital charitable role that organized religion plays.

Update: You really don't understand the concept of a non-profit incorporation, do you? I have an idea, take accounting 101. They couldn't perform charitable functions if they had to pay taxes, they're non-profit organizations. And until relatively recently, they provided the only social welfare safety net for poor people. Are you suggesting their hospitals, universities, and charities be taxed out of existence? By your faulty logic, all non-profit groups should have to pay taxes, which means they can no longer serve their purpose. The American people aren't being "ripped off" because Churches don't pay taxes, in fact, they've really gotten the better end of the deal.

Answer 3

Both the UK and USA have some serious anachronisms in their tax treatment of charities, and much of this relates to the presumtion that religious organisations are intrinsically charitable. It is actually perfectly clear that they are not.

The UK has recently be tightening things up and it will be interesting to see what the fallout will be. Qualifying as a charity now has some higher hurdles, including not discriminating against sections of society and being open to all, as well as showing that you provide real and measurable benefit.

Even before this some churches in the UK fail the charity hurdle and have to pay tax. Notable is the Mormon church, which is insufficiently open to qualify. This is perfectyl right and proper - religious organisations should only be considered charities and get tax benefits if the work they do would in all other senses be considered charitable.

The US badly needs to follow suit.

Answer 4

No, tax-free status is simply acknowledges that both the Church and the State are spheres that were created and are sustained by the grace of God. The State is not sovereign over the Church. Thus, the State does not have the authority to tax the Church. The Church is not sovereign over the State. Thus, the Church does not tax the State. Each is sovereign within its own sphere of influence. Of course, this does not mean that the spheres do not overlap to some extent.

Answer 5

To answer your main question, no. Tax-free is not an establishment of religion. In fact the tax free status is exactly what the founding fathers intended.

If churches were to be taxed then those churches would have a right, as a church, to have a say in my government. But more so, the tax free status keeps the government out of our churches.

Answer 6

It is the fact that they are (theoretically) non-profit, not the fact that they are religion, that makes them tax-exempt. But if they make a profit, as defined by the IRS, they can be stripped of their tax-exempt status.

Of course, profit is only what's left after you take out salaries and expenses. They just manage to have all kinds of salaries and expenses.

Answer 7

Charitable organizations are also tax-free.

Many churches operate soup kitchens, and donate much of their money to charity around the world. Because of this, they are tax exempt and should remain so.

Answer 8

Two issues need identifying and separating. First, there are indeed some religions that claim charity status in order to be exempt from paying tax but their sole interest is in promoting their denomination and they only do charitable works to the extent necessary to be classified as a charity. Their motives are suspect and they should be exposed as charlatans if that is what they are. I will mention one huge American religion that could do with the spotlight being turned on it.

The Watch Tower Bible & Tract Society (Brooklyn HQ) claims charity status in some countries, but not all. Yet its legal reason for existing is to publish literature - which is entirely about its own view of religion - it is out to promote itself and gain converts. Because it pays hardly any wages (virtually all its workers are volunteers who get board and keep in some cases, and pin money, or a meagre monthly allowance that hardly pays the rent) it is making vast profits. Members are expected to pay 'a contribution' for all literature they take away at the Kingdom Hall, AND to hand over to the Society all donations for that literature given to them by the public. Technically they are not allowed to 'sell' this literature (in countries where they're registered as a charity) but that hardly slows the flow of dollars into Brooklyn coffers. They might claim to be educating the public, but their idea of education is not the same as that of bona fide Christian groups that, for example, run schools to get pupils qualified via recognsied secular exams.

The second issue is that some governments are trying to control religions, and using money to do this (the old carrot and stick technique). The UK Charities Act 2006 removed the presumption that groups existing for the advancement of religion / education and/or relief of poverty provide public benefit. Given the example above, that's fair enough. But because of a few bad eggs, genuine religious charities might also be penalised. The ones that pay decent wages, pensions, insurance; that do social work even better than Councils do - if they lose tax-free status, they will have to close shop and then the Government will rue the day as they will have to pick up the massive amount of social work done by them. I work for the Christian religion that is the second biggest social work charity in Scotland. They are having to battle for the right to expect key workers to be sympathetic to the Christian ethos of the charity - not to be members of the denomination, or even Christians - just sympathetic! But Government seems out to get such charities to accept their choice of workers and volunteers, otherwise they will withdraw grants! Is this blackmail? Is the plumeting morality and political correctness of secular Britain at back of this - trying to force the church to accept its anti-Christian laws? Once the thin edge of the wedge is in place, then we will see what it leads to - totalitarian control? It's amazing how irreligious people can be so blind to the immense good church charities do. They seem to have such hatred for church support of marriage, for example, that they try to control the church through secular laws, and all under the guise of non-discrimination!

So, your Q1 - their assets are for PUBLIC benefit (except for a few charlatans) .
Q2 - They are the ones supporting public services!
Q3 - Support for orphans, adoption, marriage, education, morality, the poor, the mentally handicapped, the disabled, the demented.... the list goes on and on - Government ought to be grateful and encouraging all of that instead of clamping down with political correctness.
Q4 - Law-abiding religions that do what Jesus said by giving to Ceasar what is Ceasar's, have no qualms at being registered and licenced, but they look to God for his support to continue, if that be his will, and if governments first withdraw grants then start taxing them, they will not rebel. They are government's finest citizens, whether they're treated like serfs or not. But our world will be a darker place if church charities are stifled by governmental financial greed and/or attempts to stop Christianity spreading.

Answer 9

no-it's not 'establishment of religion'-the government did not establish our church, nor is it 'licensed'-it IS regularly audited in order to ensure that we are a non profit organization, and as a member of our finance and accounting committee, i can assure you that we are definitely non-profit! in fact, if we were to be taxed like corprations, we could expect big fat refunds year after year! our pastor, associate pastor, secretary, and custodial staff are paid-and we are treated exactly the same as any employer (filings, withholding, etc)
to the larger question of paying taxes-as soon as the nra, peta, united way, kidney fund, naacp, habitat for humanity, aclu, and all the rest start paying taxes, sign us up, too!

Answer 10

No because the Supreme Court has said so. If they did it only for one religion, then the answer would be yes, but it is for all recognized religions.