Written by Don Byrd
Churches are exempt from taxation not because they are religious per se, but because they are nonprofit organizations, qualifying for 501(c)(3) status. That privilege does also align with constitutional religious liberty principles, keeping the government from meddling in the affairs of houses of worship. Taxing churches would inevitably require the kind of oversight and inquiry that create problematic entanglement between church and state.
A new report published by Free Inquiry magazine, however, suggests the long-standing tax exemption for religious organizations and many other nonprofits should be overturned. The Washington Post reports:
[University of Tampa Professor Ryan] Cragun and his co-authors — Stephanie Yeager and Desmond Vega — examined federal tax exemption laws, and some state and local laws, specifically in their home state of Florida. They conclude:
* States bypass an estimated $26.2 billion per year by not requiring religious institutions to pay property taxes.
* Capital gains tax exemptions for religious institutions may be as much as $41 million a year.
* U.S. clergy may claim as much as $1.2 billion in tax exemptions annually via the parsonage allowance.
Cragun would limit tax exemption only to those organizations, religious or secular, who provide “whose services the government would have to supply if those organizations disappeared.” I’m not sure this standard is remotely workable, much less principled. For one, how will we predict the impact of the potential disappearance of nonprofit organizations?
