Tax Exemption of Churches
those properties for nonpayment of taxes. It [397 U.S.
Tax exemption of churches Is it
constitutional?
As much as one quarter or one-half of a typical
U.S. city may be made up of tax-exempt property,
much of that churches or church schools. FFRF
receives many queries by disgruntled taxpayers
over this involuntary form of subsidy.
Tax exemption of churches Is it constitutional?
As much as one quarter or one-half of a typical U.S. city
may be made up of tax-exempt property, much of that
churches or church schools. FFRF receives many queries
by disgruntled taxpayers over this involuntary form of
subsidy. It is important to point out that the Supreme
Court has spoken on this question, finding it
constitutional. That does not mean that citizens cannot
educate about the inherent problems and inequity, write
letters to the editor raising questions over the wisdom
and expense to taxpayers of this exemption, etc. But it
does mean that if there were continuing litigation over
property tax exemptions by churches, it would have to
involve very specific types of abuses.
Below is a short discussion of the Supreme Court's
ruling over property tax exemption for churches, and at
the conclusion, some of the inquities involved in current
practices.
The Walz decision
The U.S. Supreme Court, by a vote of 8-1, upheld the
tax exemption of churches in Walz v. Tax Commission of
the City of New York, 397 U.S. 664 (1970). Walz, a self-
described Christian who did not belong to any church
and owned real estate in Richmond County, N.Y., sued
the tax committee over property tax exemption for
churches. Walz claimed he and other taxpayers were
forced to indirectly subsidize churches.
The majority decision, written by Chief Justice Burger,
held that the tax exempt status granted to all houses of
worship is the same privilege given to other nonprofit
organizations:
"The legislative purpose of a property tax exemption is
neither the advancement nor the inhibition of religion; it
is neither sponsorship nor hostility. New York, in
common with the other States, has determined that
certain entities that exist in a harmonious relationship to
the community at large, and that foster its 'moral or
mental improvement,' should not be inhibited in their
activities by property taxation or the hazard of loss of
664 , 673] has not singled out one particular church or
religious group or even churches as such; rather, it has
granted exemption to all houses of religious worship
within a broad class of property owned by nonprofit,
quasi-public corporations which include hospitals,
libraries, playgrounds, scientific, professional, historical,
and patriotic groups. The State has an affirmative policy
that considers these groups as beneficial and stabilizing
influences in community life and finds this classification
useful, desirable, and in the public interest. Qualification
for tax exemption is not perpetual or immutable; some
tax-exempt groups lose that status when their activities
take them outside the classification and new entities can
come into being and qualify for exemption."
Justice Douglas strongly dissented, saying: "one of the
best ways to 'establish' one or more religions is to
subsidize them, which a tax exemption does." Douglas
rejected the idea that it would be "disruptive of
traditional state practices" to end the arrangement. "A tax
exemption is a subsidy" he wrote. Douglas noted that
James Madison, primary architect of the Constitution,
famously objected in his Memorial and Remonstrance to
any citizen being compelled to contribute even "three
pence" to support a church.
Citing Murdock v. Pennsylvania, 319 U.S. 105, Douglas
quoted: " 'We do not mean to say that religious groups
and the press are free from all financial burdens of
government. See Grosjean v. American Press Co., 297
U.S. 233, 250, 449. We have here something quite
different, for example, from a tax on the income of one
who engages in religious activities or a tax on property
used or employed in connection with those activities. It
is one thing to impose a tax on the income or property of
a preacher. It is quite another thing to exact a tax from
him for the privilege of delivering a sermon.' Ibid. State
aid to places of worship, whether in the form of direct
grants or tax exemption, takes us back to the Assessment
Bill and the Remonstrance. The church qua church
would not be entitled to that support from believers and
from nonbelievers alike."
Douglas suggested that it would be "constitutionally
proper" to grant tax exemption to church agencies that
perform functions of the state, such as care of orphaned
children and the destitute. " Under the First Amendment
a State may not, however, provide worship if private
groups fail to do so," he added.
"The religiously used real estate of the churches today
constitutes a vast domain," Douglas warned " Their
assets total over $141 billion and their annual income at
least $22 billion. Id., at 232. And the extent to which
they are feeding from the public trough in a variety of
forms is alarming. Id., c. 10."
At the time Supreme Court ruled against tax exemption
of churches, constitutional scholar Leo Pfeffer opined
that had the court ruled the other way, Congress, at the
behest of church lobbies, would doubtless have
responded by amending the constitution to guarantee
such exemption. Nevertheless, there are many
unanswered legal questions.
IRS favoritism to churches goes unaddressed; leads
to power abuse
As yet, the Supreme Court has not addressed IRS
regulations which unfairly favor churches, including:
* automatically granting tax exemption to churches (as
distinct from religiously-based nonprofit groups, which
must file for exemption like other nonprofts);
* exempting houses of worship from filing the exacting
990 form which all other tax-exempt 501(c)(3) charities
must file, accounting for finances, ensuring that
individuals do not profit and that money that is being
raised under nonprofit auspices is being spent for
nonprofit purposes.
Such exemptions for churches show preferential
treatment. Churches which often demonstrate hostility
toward the separation of religion and government,
attempting to control "moral" questions such as abortion
rights and marriage equality, and bully public officials
into legislating dogma, often then claim it would violate
the First Amendment for churches to be treated like all
other tax-exempt groups and simply report income and
expenses. This has led, as Douglas noted, to a "vast
domain" of church largesse which is often not accounted
for to anyone. Even as conservative a member of
Congress as Chuck Grassley, R-Iowa, has been appalled
at the financial abuses of many televangelists. Although
the ranking Republican on the Senate Finance
Committee, Grassley attempted without success to get
several of the most grandiose church ministries to
account for their money in 2007 and 2008.
Consider the tragedy of Jonestown in November 1978,
after the Rev. Jim Jones was able to amass an armory, a
fortune, drugs and many foster children (for which his
church typically was receiving subsidy) and to remove
them all from the United States to his ill-fated colony in
Guyana. The colony ended with the execution of Cong.
Leo Ryan, who was investigating abuses at the request of
constituents, and the horrific murder or forced suicide of
more than 900 followers. Only a minister in the United
States, with our country's lack of oversight of religion
and its wealth and transactions, could have gotten away
with the kind of human rights violations Jones was able
to for so long. Had his church been required to file 990
forms and account for its money, perhaps this tragedy
would never have happened. Certainly, Jones' ability to
abuse people and power in the name of religion without
being prosecuted was partly aided by the fact that he did
not have to account to the government for anything
financial.
Similarly, scandals involving the bribing or silencing of
victims of pedophile priests by the Roman Catholic
Church and other denominations, have flourished under
financial secrecy.
Since George W. Bush introduced the "faith-based
initiative," the U.S. government has no longer required
that religious welfare organizations receiving federal or
public funds to deliver social services create secular
arms, take down religious symbols or stop proselytizing
in places where they serve public clients. Money is
fungible, meaning that if a religious agency receives
federal grants to dole out social services, such grants
than free up an equivalent amount of church money to be
used for its proselytizing purposes. Where public dollars
go, public accountability ought to follow. The books of
any group receiving public funds should be open for
examination by the government. The situation is ripe for
abuse.
Other types of subsidy
Churches, which do not pay property taxes, often receive
more benefits than individuals and businesses which do
pay their fair share. This can include expensive,
individualized traffic control by police and extra security
checks, not to mention other types of police and fire
protection. FFRF has received and investigated
complaints whereby city snow removal crews are
regularly clearing huge parking lots and sidewalks for
churches. FFRF has complained about one midwestern
town where church water bills were absorbed by the
town (that is, taxpayers). There may be many hidden
layers of subsidy.
While property tax exemption of churches has been
upheld by the Supreme Court, there may be other
avenues to explore. One of FFRF's members, John
Patrick Michael Murphy, managed to place the repeal of
state tax exemption of churches on the Colorado ballot
in the 1990s. While it did not pass, it did raise
consciousness and educate. State and local government
subsidies of churches may be more vulnerable to repeal.
What you can do
Amassing national information on the extent of property religious subsidy local taxpayers are required to make.
tax exemption by religious denominations is difficult. Because churches pay nothing, you pay more.
You could start with your town or municipality. Your
city tax assessor's office should have records which *FFRF is a non-profit, educational organization. All dues
show which properties in your area are exempt from and donations are deductible for income-tax purposes.
property taxes. While your local government probably FFRF has received a 4 star rating from Charity
does not tabulate those figures, the basic information is Navigator
open to the public. It is a matter of distinguishing
churches from other secular and civic institutions/groups Contribute to Nonbelief Relief
which are property-tax exempt. Once you have a general
estimate, share the results with FFRF and by a letter to
your local newspaper, calling attention to the amount of