The mess over tax exemptions for churches

I have written before how the tax exemption given to churches creates opportunities for all manner of abuse. The practice of granting churches tax exemptions is long-standing, dating to before American independence but its constitutionality was not tested until 1970 when the US Supreme Court ruled that while it would not be permissible for the state to actually give churches money, granting tax exemptions was a passive form of state support that passed muster because the state had an interest in promoting organizations that improved the general welfare and the Establishment Clause discouraged entangling religion with the state, and having the state tax churches would lead to more entanglement than exempting them from taxation.

Whatever one may think of the decision or the reasoning, there is no doubt that churches jealously guard this privilege even as they abuse it, and try to fight any and all attempts to pay the kinds of taxes and fees that all other organizations must pay.

Take for example what happened in the Illinois city of East St. Louis. The city council had proposed that all businesses to pay a $100 ‘annual registration fee’ to cover the cost of building and fire safety inspections. But church pastors packed city hall to protest, saying that this fee was indistinguishable from a tax and that they should not have to pay it, citing the Establishment Clause in support.

Church-state separation advocates say by demanding payment of churches for city services, and levying fines for nonpayment (and potentially putting a church in jeopardy of shutting its doors), a municipality would be entangling itself in church affairs.

The city council finally passed a compromise proposed by the mayor that said that churches don’t have to pay the fee but that they would then have to hire their own people to certify that the buildings met the fire and safety requirements, and that would cost around $500.

What these churches want are the full benefits of the protective services offered by the city without paying for anything.

As Sarah Barringer Gordon, a constitutional law professor and professor of history at the University of Pennsylvania, said the idea of tax exemptions for religious institutions has evolved over the last two centuries “into something more and more generous.”

If there is one thing that unites organizations across the spectrum of all religions and from fundamentalist to liberal, it is that they should not pay any taxes in any form for the common good. Who says that religions cannot come together?

Churches absolutely love the Establishment Clause when it comes to not paying taxes. When it keeps religion out of schools? Not so much.


  1. says

    The other part of that deal was that churches would stay out of politics, in return for the government staying out of their pocketbooks. Since they’ve broken their side of that deal, it seems only reasonable for the IRS to start collecting taxes on all the churches that play politics.

    Like that’s going to happen. 🙁

  2. fastlane says

    I thought it was fairly common for churches to pay local and property taxes. I know some places allow complete exemptions, but I never did the research (and wouldn’t know where to start) about what states/counties/cities have property taxes applied to churches.

    Unfortunately, with the Newdow and some other recent cases, the issue of standing has become such stick to beat citizens of the head with, there’s no effective way to protest the also first amendment violation of the gov using my tax money to support religious institutions.

    We need to start reminding these churches that their tax money is also supporting *gasp* mosques!

  3. Sili says

    Doesn’t this mean that the churches don’t want the publicly funded fire department to put out any fire in a churchowned building? Nor should they want the police to investigate theft and vandalism. And of course, they’re happy to pay for any damages due to their not having been inspected as well.

    I can live with that.

  4. thisisaturingtest says

    Aside from the fact that the churches will end up paying around five times much to “certify” themselves as they would pay to let the state do the job…who certifies the church-sponsored certifiers?
    It seems to me that the issue is deeper than just money; the money is just a symbol for the depth of entanglement between the church and the state. If a church is going to exist in a secular society, it can’t do so completely in a vacuum; there’s got to be a certain amount of involvement that goes both ways. The trick is to allow the freedom of religion without allowing the religion to affect public policy to a point where the religion becomes the policy.

    When it comes to the issue of fire safety, it seems to me that that can’t be just left to the church to certify on their own. If a church burns down and kills a lot of people, is the church going to accept complete blame for that? I suspect not; scapegoating seems (especially lately) to be such an inherent part of religion that I think the first impulse would be to find anyone but god (or themselves, since they’re his people) to point the finger at (or, to look at it another way, to use god as the ultimate scapegoat- “this was god’s will! Nothing we could do about it!”). They want the freedom, but don’t want to pay for the responsibility beforehand or accept it afterward- religion is a delicious way to have your cake and eat it too. There was a time, when the church was the state, that the freedom was irrelevant, which made the responsibility easy to share. In a secular society, the freedom of religion makes the responsibility of it easy to avoid. The churches shouldn’t rely on the one to duck the other.

  5. says

    If a church burns down and kills a lot of people, is the church going to accept complete blame for that?

    That would, presumably, be an “act of god.”

  6. flex says


    Churches are tax exempt, including local property taxes. This had led our treasurer, a very devout christian, to be strongly against allowing any more churches in our township because she doesn’t want to see the tax base get any smaller. (And always gives the less religious members of the township board, including myself, a chuckle when she says this.)

    However, other activities run by the church, like a church school, are not automatically tax exempt. Salaries of church employees are also taxed as income (with some exceptions). So some of the monies collected by churches does go to taxes. This varies from municipality to municipality, I’ve heard of some municipalities who waive the taxes on other church income, but it isn’t required.


    If the municipal officers are worth their salt, and the article suggests that they are, they will insist on an independent auditor for the fire and safety audit. The municipality may well use their own building inspector and fire chief then charge the churches what a normal inspection would cost. $500 is about right for two inspectors to spend a few hours looking at the fire and safety conditions and then write reports on what they found.

  7. smrnda says

    I can understand providing special tax-exempt status to non-profit agencies that provide some kind of services to the community, but these agencies need to be aggressively audited. I think that non-religious ones more or less are, but that religious institutions escape the same level of accountability.

    What I find bothersome about religion, Christianity in the US in particular, is its commitment to avoid any sort of accountability to outsiders. Faith based residential programs for drugs or which house minors do a lot to avoid oversight, and at least I’ve read of several faith based drug programs (Teen Challenge is one) that would market itself as a drug treatment program to get people referred from court and government money, but which, for liability reasons, demanded that clients sign a paper that they acknowledge it was a ‘ministry’ and not a certified drug treatment program in any way. Dishonesty seems to be the norm for agencies like that. I’d say the books need to be open to the government and the public.

  8. John Hinkle says

    I don’t understand how taxing a religious entity is an entanglement issue, other than an entanglement of the entity’s pocketbook. Taxing a religious entity does not affect their ability to worship as they please, other than possibly forcing them to close if the tax burden is too high and they go broke. But hey, that the breaks that the rest of us have to live with.

    I wish religions would be classified as businesses. The woo portion -- that which does nothing charitable -- would be taxed, and the charitable portion could exist like any other human services non-profit.

  9. Mano Singham says

    In the 1970 Supreme Court ruling, the majority opinion explained it thusly:

    “Governments have not always been tolerant of religious activity, and hostility toward religion has taken many shapes and forms economic, political, and sometimes harshly oppressive. Grants of exemption historically reflect the concern of authors of constitutions and statutes as to the latent dangers inherent in the imposition of property taxes; exemption constitutes a reasonable and balanced attempt to guard against those dangers. ”


    “Determining that the legislative purpose of tax exemption is not aimed at establishing, sponsoring, or supporting religion does not end the inquiry, however. We must also be sure that the end result — the effect — is not an excessive government entanglement with religion. The test is inescapably one of degree. Either course, taxation of churches or exemption, occasions some degree of involvement with religion. Elimination of exemption would tend to expand the involvement of government by giving rise to tax valuation of church property, tax liens, tax foreclosures, and the direct confrontations and conflicts that follow in the train of those legal processes.”

  10. Trip says

    My concern with rescinding tax exemption for churches is that the requirement that they not be involved in politics could also be rescinded. If they were free to openly promote right-wing ideas and candidates and influence their voting ‘sheep,’ they could inflict even more damage on our secular society than they already have.

  11. John Hinkle says

    Thanks, Mano, for the additional info and link. I read the 1970 ruling and see that the issue is (of course) more complex than I thought. I think basically the ruling comes down to: tax exemption is the path of least resistance for avoiding government entanglement in religions. At the very least I can see how a government could attempt to over burden a religious entity with onerous taxation as a form of discrimination, though I don’t see why the courts couldn’t be used to rectify same. I guess the Court considered that to be more “entanglement.”

    The ruling also has several places where it uses arguments from “tradition” or “history,” essentially claiming that previous courts tacitly allowed tax exemption for churches, and that traditions should not be lightly cast aside. Personally I think that’s balderdash, but then again, I’m not on the SC, and maybe “tradition” has weight in their considerations.

    So it sounds like the SC will not any time soon remove the tax exempt status of religious entities. One can only hope, then, that the FFRF’s suit to force religious entities to conform to the same requirements other non-profits are held to (IRS form 990) will win. I’m not too optimistic though.

  12. John Hinkle says

    They already are involved in politics, using perhaps veiled language if they want to be “subtle.” e.g., Telling a congregation that the Lord wants them to vote pro-life does not explicitly tell them who to vote for, but it’s *wink wink* understood.

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