Separation of Church and State — Taxes

Source: Churches and Taxes – ProCon.org.

US churches received an official federal income tax exemption in 1894, and they have been unofficially tax-exempt since the country’s founding. All 50 US states and the District of Columbia exempt churches from paying property tax. Donations to churches are tax-deductible. The debate continues over whether or not these tax benefits should be retained.

Proponents argue that a tax exemption keeps the government out of church finances and thus upholds the separation of church and state. They say that churches deserve a tax break because they provide crucial social services, and that church tax exemptions have been in place for over 200 years without turning America into a theocracy.

Opponents argue that giving churches special tax exemptions violates the separation of church and state, and that tax exemptions are a privilege, not a right guaranteed by the US Constitution. They say that in tough economic times the government cannot afford what amounts to a subsidy worth billions of dollars every year.

I agree with some parts of both of the pros and cons:

  • I think in as much as churches do provide crucial social services they should be able to proclaim tax exemptions in those areas. That accounts to somewhere around 3% of most of their budgets. There are many aspects of the church that are more country club like than social service like. Those areas should be taxed the same as any other social organizations.
  • When we exempt churches from taxes we are in effect requiring others to make up for the lost revenue. Churches like all other institutions in our country depend on fire, police, and other rescue services.  They depend on good roads to get there. They use their share of our water and sewer infrastructure. They should share in the burden of maintaining those services.
  • Giving tax breaks to churches in effect forces all American taxpayers to support religion. We should not be asking those citizens who choose not to be part of a church organization to make up for the tax exemption given to churches.
  • Tax exemptions are a form of subsidy. They allow churches to have lower operating costs. In that regard our government is subsidizing religion which is against constitutional principles.

I know many churches, but especially the Catholic church, has many other properties besides the church buildings themselves. I don’t know how those other structures of the church are  treated when it comes to taxes. If we are serious about keeping a wall between church and State then we should not be subsidizing the religious institutions in this country with special tax exemptions. It looks like we may have an opportunity to do some serious tax reform in the coming months. This topic should be on the table for consideration.  But I really doubt if it is.

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