Over the last year, I have gained many liberal readers who have supported my über-progressive positions on many issues: the environment, bank bailouts, marriage equality, war, and the surveillance of citizens to name a few.
But this post is sure to piss off many of my liberal readers. Nonetheless, this blog is not meant to be a liberal rubber stamp, but to use reasoned analysis to bring together both progressives and libertarians who fear the power of an authoritarian state and corporatism - and that means crossing swords with friends every once in a while.
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Calls for the taxation of churches is not grounded in sound
constitutional law, sound taxation procedure, or sound historical
understanding: it is based solely on resentment against churches – specifically
conservative churches – whose doctrines and members advocate for conservative
causes.
1. The Constitutional Prohibition
The very first words in the First Amendment of the United States
Constitution read:
“Congress shall make no law respecting an establishment
of religion, or prohibiting the free exercise thereof...”
The admonition here has two parts: The US Government shall not take any action
that establishes an official religion (or which advantages one religion over
all the others), and the US Government shall pass no law that prevents people
from worshiping in their chosen church.
It is not up to the government to decide what is good
worship or bad worship, recognized churches vs unrecognized churches, good
doctrine or bad doctrine: the government’s
role is to stay out of religion. In
1970, the U S Supreme Court – by a decisive vote of 8-1 ruled that the Federal
Government could not tax churches, as that would constitute undue government interference
in the exercise of religion.
This notion has long legal precedence. A unanimous Supreme Court noted in 1819 in McCulloch
vs Maryland that “the power to tax is the power to destroy.” Any federal
income tax levied on churches – depending on how that tax rate was structured
and how that tax law was written – would possess the capability of destroying
or bankrupting churches. Worse,
depending on the application of the law to individual churches, it would
necessarily favor one denomination over another as church organizational structures,
expenses, and revenue sources (tithes, donations, yard sales, mass cards)
differ from church to synagogue to mosque.
The government is not permitted to favor one group over another.
2. IRS
Regulations Prohibiting Political Involvement by Non-Profits
Many who wish to tax religious institutions point to IRS
regulations which specifically prohibit all 501c3 Non-Profits from political
engagement. They argue then, that those churches that get involved in politics should
lose their tax exempt status. There are several glaring problems with this
approach.
First, the IRS is a Johnny-come-lately. Yes, their regulations say this, but there
regulations may in fact violate the Constitutional provisions mentioned above.
Churches were treated as tax-exempt entities in law, under the US Constitution,
for more than 175 years before the IRS created that regulation. The Constitution trumps regulatory body
rules.
In any event, this regulation only came into effect in 1954,
the same year that “under God” was added to the Pledge of Allegiance. It is a curious phenomenon that those who
oppose God in public life often point to the fact that the “God” phrase in the
Pledge is a very recent innovation..but conveniently forget that the IRS
regulation is just as recent.
No IRS regulation can eliminate a Constitutional right –
including the Freedom of Speech. Anyone
and Everyone in this nation has the right to engage in political commentary,
and, as the recent election proved, they do. The right to speech is as fully
engrained in our Constitution as the freedom of Religion….and that means we let
our raucous democracy loose with political discourse. There is a good reason that the IRS almost
never goes after churches for violating this regulation: they would probably
lose at the Supreme Court.
Remember, the IRS provision against political engagement
applies not only to churches, but to all non-profits.
It applies to AIDs service organizations that testify at
public hearings, requesting increased funding for those without health
insurance.
It applies to Veteran’s Organizations lobbying city councils
for increased services to the homeless.
It applies to Teachers Unions meeting with their state
legislators when education budgets are cut.
It applies to the Environmental organizations when they
advocate against genetically-modified food, the keystone pipeline, relaxed
standards for deep-water drilling, and Arctic drilling.
You really want to strip taxes of their tax-exempt status
because of their political involvement?
Better look around at all the other non-profits that exist in the same
regulatory boat, my friends.
3. Churches already pay taxes.
Yes, that’s right.
The only tax levied by the federal government is Income Tax (discussed
more fully below). Other taxes: State
Income Taxes, Sales Taxes, and Property Taxes – are levied by state and local
governments.
Employees of religious organizations – organists,
secretaries, maintenance, cantors…already
pay personal federal income tax and social security taxes on their wages.
On a state and local basis, churches can be asked to pay
property taxes. In New Hampshire, where
thousands of acres of land are owned by church-operated summer camps, those churches
pay both property tax on the camps and business income tax on the profit
experienced by the camp. In other places, towns and municipalities place ‘assessments’
or fees for municipal services such as fire protection, water use, and trash
collection.
But for most people calling for taxation, it is the issue of
federal Income Taxes they wish to see addressed.
4. Basic Accounting 101 Suggests Churches Would Pay
Nothing Under an Income Tax.
Think about your personal Income Tax for a second.
You place your gross income on the top line, and then you
begin taking off ‘deductions’ – you, your spouse, your children, and then the
standard exemption or the Schedule A that permits mortgage interest, charitable
donations, and health expenditures. At
the bottom of your form, you pay tax on what’s left: NOT on your gross income,
but on what was left after permissible deductions. It’s quite common for a family making $75,000
in wages to actually pay tax on only $35,000 after all the deductions are
subtracted.
Corporate Income Tax works the same way. We do not tax companies based on the raw
number of dollar bills that land in their cash register; we tax them on their
PROFIT (revenue less expenses). That
means that corporations subtract their expenditures on labor, raw material,
equipment, utilities, advertising, etc., before any tax is applied…because THAT
is how an Income Tax functions.
Some cavalierly believe that a tax on churches would be a
tax on gross donations.
Think again: an income tax on churches would be applied to
Profit, not gross donations. And regardless of how much a church receives in
donations, you can bet that just about all of it goes out in expenses: clergy
salaries, musical instruments, food, charitable work, utilities, payments to
diocesan offices, roof repairs, etc…and that means, given the experience of the
vast majority of American churches, your income tax rate would be applied
against a profit of….zero. Such an
effort would be a pyrrhic victory indeed: tax church profits, only to find that
from an accounting perspective, there are no profits to tax.
And forget the idea of taxing gross donations: that would be
like taxing raw register receipts, and treating churches this unique way would
be a display of government hostility towards religion that would never pass
Constitutional muster, regardless of who was sitting on the Court.
5. Liberals, Be Careful What You Ask For.
Our collective memories tend to be very, very short.
Most agitation for taxing churches comes from liberals who
resent the money and the ‘power’ of conservative churches like the Roman
Catholic Church, the Mormon Church, and a plethora of Fundamentalist Bible
Churches who rail against every liberal cause.
But a brief walk through history shows that every great
liberal victory was won because liberal churches mobilized en masse.
Do we forget that the Civil Rights movement and marches were
organized by the Dr. Rev. Martin Luther King, Pastor of Ebeneezer Baptist
Church in Atlanta and President of the Southern Christian Leadership
Conference? Have we forgotten that the
voter registration drives conducted in the south in the 1960’s were organized
in black churches?
Imagine if conservative, white southern governments thought
they could destroy the civil rights movement by increasing taxes on small rural
black churches, and then mercilessly taking them when property or income taxes
weren’t forthcoming. “The Power to
tax is the power to destroy.”
Women’s rights to vote, immigrant rights, union rights, the
Abolitionist movement…all were spearheaded by churches. The most recent civil
rights battle of our time – Marriage Equality – has seen Episcopal Bishops like
the Rev. Gene Robinson using his clerical office to testify before state
legislatures and encourage the Episcopal faithful to advocate for gay rights.
Congregational churches, Reform Jewish Congregations, Quakers, and
Unitarian-Universalists have all organized peace rallies, marriage equality
campaigns, and immigrant right initiatives.
Conclusion
As I wrote earlier, most of my liberal friends don’t want to
see Shelters for Homeless LGBT Youth, or Environmental Organizations, or Black
Churches driving voters to the polls to be taxed or lose their tax-exempt
status.
Rather, they want to use the heavy hand of government
taxation to ‘punish’ those conservative churches with which they disagree.
And that, more than anything, would do violence to our
Constitution, which requires an even-handed government approach to all
religious groups.
The answer is not to find a way around the Constitution; the
answer is to allow the free flow of ideas in a democracy, and out-organize and
out-vote those with whom you disagree.
And history has shown us that we can do that.
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