Changing tax exemptions for charities and religions

Via Machines Like Us, I learned of this article that points out that the cost of the tax exemptions granted to religion groups could work out to as much as $71 billion per year. Both articles were based on a study by Ryan T. Cragun, Stephanie Yeager, and Desmond Vega at the University of Tampa that was published in Free Inquiry, put out by the Council of Secular Humanism, so the exact figure may be challenged by those who claim that it is not an impartial source.

But there is no question that the amount must be substantial. What I don’t understand is why religious groups have tax-exempt status at all. There seems to be no justification for it in the least. In fact, this exemption seems to attract numerous charlatans and conmen who use their tax-exempt religious status to live lives of luxury on the backs of their poor gullible followers. But the courts and public opinion have been wary of removing this obvious conflict in the separation of church and state.

One could make the case for tax-exemptions for charitable institutions, though here too there are numerous frauds.

What I would like to see is that tax deductions should be given only for the amount of the donation that actually goes for charitable work and that this should apply to religious organizations as well. Currently charities are required to file paperwork with the IRS that is reported publicly that shows how much of the money collected goes towards actual charitable works and how much goes towards salaries, fund-raising, and other overhead costs. Most donors don’t bother to seek this information, which is what allows some charities to pay huge salaries and incur extravagant expenses.

If, on the other hand, donors are allowed to deduct only that portion of their donation that went towards actual charitable work, and charities were required by law to give them that information when they sought donations, that would shift giving towards the better-run and worthy charities. If one charity allowed you to deduct only 20% of your donation but another allowed 60%, it is clear which one would get more money and this would be an incentive for charities to be leaner.

Religions should not be able to use their charitable work as a justification for making all their income tax-exempt since only part of their money goes for charity and only that should be allowed.


  1. says

    Given the political climate, I am willing to settle for an even more modest compromise: Religions still get to claim tax-exempt status for everything they do, but like any other non-profit they have to open their books in order to get it, so we can see if they are actually doing what they say they are doing. That’s it, that simple. Let them have their taxpayer subsidized proselytizing and temple building and all that nonsense (it would be a political non-starter to try and take that away right now anyway), just make them show that the money is going to that useless garbage, and not to yachts and mansions for the pastor.

    This really ought to be politically feasible. The only way even the most staunch religious apologist could oppose such a thing is if a) they thought churches should be allowed to cheat, or b) they think no churches cheat. The first is morally repugnant, the second is hopelessly naive.

    Let ’em keep their special exemption. Just give us a peek at the books…

  2. says

    Good afternoon Mano,

    The first amendment to our Constitution effectively prevents the Federal government from taxing religions and the 14th amendment prevents state and local governments from doing so.

    Do all you can to make today a good day,


  3. Keljopy says

    Actually, this interpretation is not at all certain. The way I (and many others) read it, making “no law respecting an establishment of religion or prohibiting the free exercise thereof” actually implies treating any religious institution exactly the same as any other business or non-profit (depending on if they want to follow the rules of a non-profit or not). Just because the current interpretation is that religion can’t be taxed doesn’t mean it is necessarily so or that this must necessarily always be the interpretation followed.

  4. machintelligence says

    It is not just the income from donations that is exempt from tax. Churches and other property owned by religions is also usually granted a tax exemption.

  5. says

    Good afternoon Keljopy,

    I’ll give you the first, no state religion, but the second part, free exercise thereof, is pretty clear, especially when you examine the non-exercise of religion in nations during the 17th and 18th centuries where taxes were used to suppress unsanctioned religions.

    I’m with Mano, but we’d have to go the route of some form of the single most important amendment, the 21st, and I think the potential dangers there outweigh the potential gains.

    Do what you can to make today a good day,


  6. Jared A says

    Doesn’t that only apply if the taxation of the non-state religions is uneven? Anyway, we’re not talking about taxing a religion for existing, but taxing its INCOME. There is a difference there.

  7. Keljopy says

    I still disagree. I believe the free exercise clause implies that congress does not make any laws specifically to prohibit free exercise religion. I think free exercise should be the ability to be treated exactly the same as anything else. I don’t believe it prevents the government from treating religion exactly like other institutions when it comes to taxes, although it would prevent the government from taxing them MORE than other institutions (and from taxing them if they followed non-profit rules). I see it as a negative right (the government may not stop you from exercising your religion) rather than positive and I think being free of taxes or transparency (in the case of non-profits) implies a positive right.

    I actually think that allowing them to operate in this country without paying the same taxes as other similar institutions (or following non-profit laws if they wish to do that instead) is against the establishment clause as the government is actually helping to establish religion over non-religion by not treating them equally. Unfortunately our current system does not agree, however I don’t think it would be necessary to have a new amendment, just a completely different cultural mindset and the right set of supreme court judges, although I don’t see it happening anytime in the near future.

  8. says

    I’m in total agreement about any special treatment for religious organizations being a violation of the Establishment clause. We do have a long way to go in convincing people about this, though.

  9. says

    Good morning Jared,

    That’s true, you’re absolutely correct: uneven taxation was the problem; but our Founders had to deal with the historical oppression of religious beliefs by uncertain government (remember that at the time of the writing of our Constitution, we had not yet experience the single most important election of our history, the election of John Adams to the presidency in 1796 and the peaceful transfer of power in the following year.

    Again, I’m in total agreement with Mano, the tax exemption for religions ought to be removed, but the mechanism for achieving that eludes me until such a time as Atheists have a clear majority in the nation.

    Do all you can to make today a good day,

    Have Coffee Will Write


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