As they begin to overhaul the tax code, Senators Baucus and Hatch announced that they would be starting from a "blank slate," demanding that lawmakers step forward to justify every single exemption. Thus, charitable tax deductions have come into the line of fire. Since 2009, President Obama has been trying to limit the value of these deductions -- and it's a good idea. The range of eligible charities needs to be narrowed as well, and religious organizations in particular should be excluded.
The deductibility of donations to religious organizations creates a discriminatory religious subsidy. One is free to donate to the religion of one's choice, but government support of these donations burdens every American, even the non-religious, with support for the faith industry. Hence, Americans find themselves with freedom of religion but not freedom from it.
Charitable deductions intensify the tax inequality between states, with several states receiving more in federal spending than they pay in income taxes. The South as a whole collects $1.29 for every $1 paid in income taxes -- more than any other region in the U.S. This inequality arises partly because Southerners give more to charitable groups than other Americans by a significant margin. They donate an average of 5.2 percent of their discretionary income to 501(c)(3) organizations, which is approximately one percentage point higher than the rest of the country. Since these donations are tax-deductible, Southerners are volunteering to contribute less while simultaneously welcoming more government handouts.
Furthermore, a larger portion of Southerners' donations goes to religious groups: 83 percent compared with 65 percent in the Northeast. These donations usually take the form of annual church membership fees, helping members to reduce their tax bills and fulfill their communal obligations in one fell swoop. George Osborne, Britain's Chancellor of the Exchequer and an advocate of limiting the deductibility of charitable donations, famously said that "in every case exemption means relief to A at the charge of B." Religious Southerners hence shift the burden to non-religious Northerners, turning the tithe into a tax. One finds oneself unable to divorce the church in the U.S., as even when one declines to donate, one still foots the bill.
Religious institutions fill their coffers with state funds, and America proves itself incapable of casting off the Old World paradigm that the provision of religion is the province of the state. Individuals are free to choose their affiliation, but affiliate they should, because they face the choice either to redirect state funds to their own church or else to suffer the tax burden passed along from someone else's donation. The system is designed for a diverse but religious nation; every American is presumed to be a person of faith. No one is able to opt out, leaving the non-religious with the sense that, in the words of Justice Brennan, "their views are not similarly worthy of public recognition nor entitled to public support."
Our current policy is not only unjust; it also contradicts one of the great themes of the American narrative. America's radical defunding of religion has been one of its greatest policy achievements, and we now understand the separation of church and state as a cornerstone of our democracy. State churches were disestablished long ago, and America refused to name an official faith in accordance with the belief that religions should raise their own funds and not rely upon the state for support and validation. This privatization has served as a model for much of the rest of the world by paving the way for religious liberty and spiritual innovation. The disengagement of government from the religious marketplace has made America a safe haven for minorities who were always outsiders in states where the national identity was officially bound to a majority creed. Moreover, this decoupling has injected competition into the faith industry that has kept religions accountable, innovative, and focused on delivering maximum value to the faithful.
Perhaps it is unsurprising that the interests of the non-religious are underrepresented, since the group is by definition non-participatory. About 15 percent of Americans identified as non-religious in 2008, making them the third largest group behind Catholics and Baptists. Their numbers might seem surprisingly large, however, given the salience of many less populous groups, such as Jews and Jehovah's Witnesses. By contrast with their more vocal counterparts, the non-religious are easy to overlook. They tend not to congregate. They tend not to proselytize. They are not a political force.
Moreover, the non-religious, particularly atheists, face substantial prejudice. One is not hard-pressed to think of instances where a non-denominational "God" is mentioned in government documents or processes. In fact, last month, an atheist was told that she could not be naturalized as a U.S. citizen without evidence of church membership. Polls consistently show that a majority of Americans would not vote for a qualified atheist presidential candidate and that most respondents believe atheists, above such famously detested minorities as Muslims and homosexuals, are a group that "does not at all agree with [their] vision of American society." Fred Edwords of the American Humanist Association says, "Americans still feel it's acceptable to discriminate against atheists in ways considered beyond the pale for other groups."
America has come a long way in disentangling faith from the state and in ending systemic religious prejudice; yet, it seems our work is incomplete. Our government still dangles a pinky in the religion pool, preserving a degree of support for religiosity, a degree that oppresses our most prominent and innovative spiritual group: the non-religious. To even the distribution of the tax burden, to fight prejudice against this underrepresented minority, and to complete the construction of this "wall of separation," the United States should end the tax deductibility of donations to religious organizations. President Obama's proposed limitations and Baucus and Hatch's "blank slate" could be the first steps on the long road toward this important goal.