Religious institution's tax-exempt status

So, not that it matters, but I (atheist) was having a conversation with a christian a good while ago about the tax-exempt status of the church due to Separation of Church and State (Apologies if you reside somewhere with no such laws). We agreed that religious institutions being exempt from taxes as an application of church-state separation was dubious at best. The main idea was that a church does not have to pay taxes, yet a fire department would not let their building burn to the ground, and they are tax funded. Just as well, they get their mail delivered by a government postage system, etc. Why should they be getting city services like that and not have to pay for it?

Well, on another forum today I saw an article concerning a fire dept. not putting out a fire because the home owner forgot to pay some county service bill or something ridiculous like that. This made me remember the church thing, but as I was about to compare it to that situation, it struck me that I may actually have no clue what I am talking about, since I really do not know what taxes pay for what things and which taxes churches are exempt from.

So, for those in the know, how does that really work out? Are churches technically paying for state services or not? If not, why are they still provided to them, should they be paying? If they are paying, what is it they ARE exempt from and why are they free from paying that if they have to pay for other things? I am also interested in hearing people's general opinions and insights on how separation of church and state should be implemented and enforced, and whether you think the current system, specifically concerning taxation, is reasonable.

First, separation of Church and state simply means that they must remain two separate entities, not that they can't interact.

Second, it depends on the services.

Things like water, sewer, and garbage pick-up (if there's an option for municipal service — some places don't offer municipal garbage pick-up — there you must either take your trash to the dump or landfill yourself and pay their fees directly, or contract with a private hauler and pay their fees directly) aren't usually paid by taxes. They're supplied by a city or county department, but they are paid for directly to that department.

The Post Office isn't tax-funded either. It's a private corporation operating under a government charter that requires it to provide service to everyone who either has an address or hires a Post Office box.

The fire department is tax-funded, but except in rare cases, they don't have the option to say, "oops, you didn't pay your taxes, we aren't going to respond to your call." I'd need to know more about the case you mention before I go any further with that. Most fire departments have geographical limits within which they must respond but will only respond outside that area if a fee has been paid. Other areas have volunteer fire departments ("volunteer" referring to some or all of the firemen); these might impose a fee for coverage.

As for why some services that are tax-funded are provided, it boils down to "for the greater good of the community." It's better for the community if burning buildings are extinguished whether the taxes are paid up or not, than for some to be left to burn, quite possibly endangering others.

...if you don’t love you’re dead, and if you do, they’ll kill you for it.

^

Here is the thing about the fire: http://www.wpsdlocal6.com/news/local/Firefighters-watch-as-home-burns-to-the-ground-104052668.html I believe it was due to an out-of-jurisdiction fee, but I only skimmed most of it.

"For the greater good of the community" is an answer to the question I was trying to ask. Through my consideration, under most circumstances like the fire example, it seems the most practical, yet it still seems unfair. You mention that the separation does not mean that the two should not interact, but many people on both sides of the issue disagree for different reasons. It seems to be a very gray area.

Yep, it was an optional Out-Of-Jurisdiction fee. The homeowner has a quote in that story that basically boiled down to 'I figured they'd respond whether I paid it or not, so I didn't pay it.'

edited 5th Oct '10 7:13:35 PM by Madrugada

...if you don’t love you’re dead, and if you do, they’ll kill you for it.

Well the reasoning for churches and their tax-exempt status is simple. You don't grind religion out of society by taxing it to death. Many small churches would otherwise not exist owing to taxes basically telling them to GTFO.

Also the First Amendment makes it clear you don't promote religion but at the same time you don't restrict it either. Taxation of churches is a de facto (albeit indirect) restriction on religious worship.

"Allah may guide their bullets, but Jesus helps those who aim down the sights."

@Major Tom: Everyone's taxed, and they're not exactly struggling to survive. You pay taxes, and you can afford a computer with Internet access. Why would it be so crippling for a church?

"War doesn't prove who's right, only who's left." "Every saint has a past, every sinner has a future."

Many churches rely on donations and other community fundraiser type deals. There are quite a few priests and pastors out there in the Christian arena who don't take a paycheck from the church because of this.

Where I live is proof of this. There's less than 5000 people in a 4 town grouping along the Wet Mountains (Colorado City, Rye, Beulah and San Isabel  ^*

combined) and there's about two dozen churches. Several of them (the one in San Isabel comes to mind) are entirely community funded and are run more or less by volunteers. If you started taxing churches on general principle over half of the churches in my area would be gone in a month.

"Allah may guide their bullets, but Jesus helps those who aim down the sights."

^ You say it would be a sort of restriction of religious worship to tax churches, due to how many of them only get by on donations and such, which I can agree with. However, would you then support the taxation of churches that could easily survive even with taxes - namely megachurches or organizations that could otherwise take advantage of this like Scientology?

Okay, but those would be exempt on non-profit grounds. What about large cathedrals that are clearly wealthy and have a "mandatory donation" program? Are they not making a profit? They should be taxed, at the very least for the land they're taking up.

"War doesn't prove who's right, only who's left." "Every saint has a past, every sinner has a future."

The reason they're exempt is because they're non-profit, and non-profits/charities have a beneficial effect on society (since their money goes to programs of some sort, not to shareholders), so they're promoted by getting tax-exempt status. It would be bad for government to regulate what sorts of programs non-profits can do, so churches count. Of course a non-profit for promoting atheism would count, too.

^They're non-profit because they don't have shareholders. Overpaid leaders, maybe, but it's hard to draw a line around that without mandating that untaxed non-profits must be completely volunteer-run.

edited 5th Oct '10 9:01:43 PM by jewelleddragon

^Hmmm, I guess you're right. There's a risk of falling off the slippery slope.

"War doesn't prove who's right, only who's left." "Every saint has a past, every sinner has a future."

Of course we have tax brackets for individuals, so it's possible we could have tax brackets for charities: tax-exempt up to, say, $20M or whatever.

Or better yet, tax-exempt as long as they have less than 20% overhead.

I'd just like them to have to go through the same BS every other corporation has to go through to get NP status and have the same oversight as other NP organizations.

| DA Page | Sketchbook |

^Do they not?

My understanding is that they do not, which is why the Church of Scientology, for example, has tax exempt status while Germany regards it as a for-profit organization. It never had to jump through hoops to prove that it wasn't for profit in America.

...eventually, we will reach a maximum entropy state where nobody has their own socks or underwear, or knows who to ask to get them back.

The reason they're exempt is because they're non-profit, and non-profits/charities have a beneficial effect on society (since their money goes to programs of some sort, not to shareholders), so they're promoted by getting tax-exempt status. It would be bad for government to regulate what sorts of programs non-profits can do, so churches count. Of course a non-profit for promoting atheism would count, too.

They waive this exemption if they want to engage in political campaigning, however, which has been a point of frustration in the gay community, at least.

Dumbo

Religious institutions' tax exempt status helps to stop the government from intermingling in religious affairs as much (pretty much what Madrugada referred to earlier). I would rather the government not have to mess with how many donations a certain church/mosque/temple (etc.) gets or deal with most of the projects that go on there. I'm not saying that that would definitely happen if they weren't tax-exempt, just that if you're working from the assumption that "Separation of Church and State" is a good thing, there are reasons to not want religious institutions to be taxed.

I support a strong separation of Church of State myself. The diversity of religions coupled with the idea of freedom of religion that is a big part of the Constitution (in the U.S.) seems to warrant it I think. You could also make the argument that religious faiths are more sincere when they are completely separate from the state.

edited 6th Oct '10 5:36:03 PM by Bureiba

@ Roman: There are lots of different ways to get Non-profit status. 501(c)3's are the ones most people think of, and they all have basically the same hoops to jump through and reporting and oversight requirements. 501(c)3 includes:

• Religious,
• Educational,
• Charitable,
• Scientific,
• Literary,
• Testing for Public Safety,
• to Foster National or International Amateur Sports Competition,
• Prevention of Cruelty to Children or Animals Organizations

The tax code 501(c) section is the main one that establishes and delineates tax-exempt organizations. It has 27 categories. Then there's sections 501(d),(e),(f),(k), and (n), and section 521(a).

Take a look here for a nice chart.

edited 6th Oct '10 8:27:06 PM by Madrugada

...if you don’t love you’re dead, and if you do, they’ll kill you for it.