Debate Desk
Should Churches Lose Their Tax Exemption in the United States?
Exemption for houses of worship is as old as the republic and was upheld 7 to 1 in 1970; taxing churches would give the state leverage over what is preached.
The claim
Critics say that churches receive a large benefit that other organizations lack, that exemption amounts to a subsidy of religion and that churches that engage in politics should pay taxes like any other business.
The answer in three points
- Exemption is not a subsidy, it is a limit on government. The power to tax is the power to destroy, as Chief Justice Marshall said. A government that can tax a church can threaten it, and the founders feared the entanglement of state and church in both directions.
- In Walz v. Tax Commission of the City of New York (1970), the Supreme Court upheld property tax exemptions for religious organizations by a vote of 7 to 1, reasoning that exemption avoided entanglement and had a long history. Churches are exempt alongside schools, hospitals and charities that serve the public good.
- The Johnson Amendment of 1954 already bars tax-exempt organizations from endorsing candidates, and it has been a topic of debate. That is different from ending exemption, and conservatives disagree about whether pastors should be free to endorse. The question is about the limits on political activity, not about whether faith communities should be taxed.
A government that wants nothing from churches leaves them free to speak to it. Exemption protects that freedom.
The numbers
- The Supreme Court decided Walz v. Tax Commission of the City of New York in 1970 by a vote of 7 to 1.
- The Johnson Amendment was added to the tax code in 1954 and bars section 501(c)(3) organizations from participating in political campaigns for or against candidates, according to the Internal Revenue Code.
- The Internal Revenue Service reports that houses of worship are not required to file the annual information return that most other tax-exempt organizations file.
What they will say next
"Megachurches are wealthy." Some are, and they do the work of their congregations, including food banks, schools and counseling. The principle does not depend on size.
"Churches that endorse candidates should pay." The law already denies tax-exempt status to organizations that do so. Whether the law is wise is a matter for debate, and it is a matter of the speech of religious leaders.
"Exemptions cost the government revenue." They do, and so does every exemption. The same is true of the deduction for gifts and the exemption of nonprofits, which exist to encourage civic life outside government.
"It favors Christianity." Mosques, synagogues and temples are exempt on the same terms.
Free churches are one of the great checks on the power of the state.
"Other nonprofits are limited in politics, so why not churches?" They are, and the same law applies to churches. A pastor may speak on moral questions and public policy and may not endorse candidates from the pulpit while keeping the exemption. Whether that line is right is a fair debate, and it is not the same as taxing the congregation's property and gifts.