McCulloch v. Maryland

Old-now-new question: Should churches and other religious non-profits be tax-exempt?

Old-now-new question: Should churches and other religious non-profits be tax-exempt?

RACHAEL’S QUESTION:

Once in a while I’ll see someone comment online about how taxing churches could help with some of the nation’s financial problems. Would taxing churches help or hurt? How do other countries handle their churches and taxes?

THE RELIGION GUY’S ANSWER:

Governments always want more cash. However, a unanimous U.S. Supreme Court warned in 1819 (in McCulloch v. Maryland) that “the power to tax involves the power to destroy,” so policy-makers need to weigh societal benefits churches provide, often not available otherwise (more on this below).

Those are political and economic calculations. But there’s the far more fundamental issue of fairness.

The United States has always recognized the natural and inherent right to exemption for groups that operate on a not-for-profit basis, whether schools, hospitals, and secular charities or -- treated equally -- churches (or synagogues, mosques, ashrams) and religious charities and organizations.

However, a 2016 report from the U.S. Commission on Civil Rights stated that all sorts of religious exemptions should be designed “narrowly” so they do not “unduly burden non-discrimination laws and policies” for instance on gay matters. (Religious groups through history have hired employees who share their beliefs and moral tenets.) Weeks after that, a petition from Christian conservatives declared that tactics such as removal of tax exemption due to gay and transgender policies “threaten basic freedoms of religion, conscience, speech, and association.”

One reason for such concerns was the oral arguments prior to the Supreme Court’s Obergefell v. Hodges ruling that legalized same-sex marriage nationwide.


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