Separation of Church and Estate

As public resources grow ever scarcer in a declining economy, the time has come to reevaluate the established and often unquestioned relationship between church, state and property taxes. That the subject is considered taboo only serves to illustrate the urgent need to penetrate unexamined assumptions based on a faulty reading of history.

We often accept much about our traditions without any thought to origin. Many Americans assume, for example, that the clause "under God" in the Pledge of Allegiance was included in Francis Bellamy's original lyrics of 1892. Not so. Those words were inserted in 1954 when President Eisenhower signed legislation to recognize "the dedication of our Nation and our people to the Almighty." The new law grew from a successful Knights of Columbus campaign to transform the Pledge from a patriotic oath to a public prayer, making clear the distinction between America and our godless Communist enemies. This appeal to god and country was not without controversy, and even today about 38% of Americans believe the wording violates the principle of separating church and state.

As with the wording of the Pledge, tax exemption for church property has a complex history with an origin just as badly misunderstood. While the vast majority of Americans believe otherwise, the Supreme Court ruled in 1970 that exempting church property was permissible, but not required by the constitution (Walz v. Tax Commission of the City of New York). We have no obligation to exempt churches from property tax.

What has been obscured by time is the nature of the Supreme Court's decision in Walz, a close vote of 5-4. The minority wrote an opinion supporting the argument that state exemption for church property indirectly caused the state to make a contribution to religious bodies, in violation of the First Amendment. Exempting churches from property tax was one vote away from being declared unconstitutional.

The Tenth Circuit Court further clarified the Walz ruling in 1972 (Christian Echoes National Ministry, Inc. v. U.S.), holding that "tax exemption is a privilege, a matter of grace rather than a right." The Supreme Court went even further in that direction in 1983 (Regan v. Taxation with Representation), ruling 8-3 that tax exemption was indeed equivalent to a tax subsidy. Justice Rehnquist wrote:

"Both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income."

That is not the ravings of a left-wing nut job, but the words of a Chief Justice of the Supreme Court who sat well right of center. Even conservative courts have ruled consistently that churches have no special privilege in property tax exemptions.

James Madison, Benjamin Franklin, James Garfield and Ulysses Grant all opposed the exemption. Grant said to Congress, ""I would also call your attention to the importance of correcting an evil that, if permitted to continue, will probably lead to great trouble in our land... it is the accumulation of vast amounts of untaxed church property."

Extending that privilege can no longer be justified.

Two compelling arguments dictate that such exemptions should be abandoned. First, fiscal sanity suggests that states can no longer afford the luxury of foregoing the revenue lost through exemptions at the expense of all other taxpayers. Second, religious institutions that engage in blatant political activism violate IRS statutes that prohibit political campaigning by any tax-exempt religious group. Let's look at each of these arguments in turn.

Fiscal Sanity

The estimated value of untaxed church properties in the United States is on the order of $300 billion to $500 billion (a wide range because no central database collates these numbers from counties across the country). Undeniably, residents pay higher taxes than they would if religious institutions paid their share on this vast sum. Churches use city services, rely on good streets, are protected by the police, and would expect the fire department to respond to a blaze on church property. Yet churches do not contribute to the city accounts from which funds are drawn to pay for those services. Everyone else has to pay more to make up the difference. Across the nation tax authorities report that exemptions for property and buildings used for religious purposes contribute significantly to and are often the biggest cause of lost revenue.

Every time a new church is built on land that could generate property tax, all other tax payers are placed immediately at a disadvantage by becoming the source for that lost revenue. That must stop. Churches should be taxed like the big businesses they have become. The U.S. Treasury reported way back in 1968 that established religious organizations no longer depend primarily on charitable contributions and members fees, but rather on the return from multiple investments. In 1986, the last year for which I can find accurate numbers, religious organizations earned an annual investment income of $100 billion. That number is probably five to ten times greater today.

The argument for exemption on the basis that churches are non-profit and provide charitable services to local communities holds no water. Other organizations with identical characteristics do not benefit from the exemption. The exemption is clearly focused on religion. This brings us to the second argument.

Pulpit Politics

Churches are big businesses, but also big political machines. The pulpit has become a central point for political rallies. Churches have thrown off the pretense of being non-political. Examples of political activism are abundant.

In 2004, the Catholic Church interjected itself directly into presidential politics. Referring to candidate John Kerry, the church declared that any person who is "personally opposed to abortion, but supports a woman's right to choose" incurs automatic excommunication. The Boston Archbishop Sean O'Malley said that pro-choice Catholics are in a state of grave sin, and cannot take communion. If any doubt lingered that the target of these pronouncements was Kerry himself, St. Louis Archbishop Raymond Burke went so far as to forbid Kerry from taking communion when the candidate was campaigning in the area.

If that example is too subtle, O'Malley's predecessor, Cardinal Humberto Medeiros urged Catholics not to vote for Barney Frank and James Shannon, two liberal Democrats in Congress.

In a debate during the 2006 gubernatorial election, Sarah Palin stated that religious leaders should be able to support a particular candidate from the pulpit. That is not terribly surprising coming from her. Her religious mentor, Pastor Kalnins, told followers they would go to hell if they supported Senator Kerry during the 2004 presidential election.

This year, in a repeat of 2004, a South Carolina Catholic priest, the Rev. Jay Scott, threatened his parishioners that a vote for Obama would deny them communion. The priest said that any support for Obama "constitutes material cooperation with intrinsic evil." Rick Warren, pastor of the Saddleback Megachurch in California, said he "hopes to redefine presidential politics." The Mormon Church actively lobbied for and funded Proposition 8 in California.

We no longer even bother pretending otherwise: churches are political organizations that routinely violate IRS statutes, undermining any claim they might have had to property tax exemptions.

States can no longer subsidize churches and other religious organizations on the backs of ordinary taxpayers. Churches have evolved into nothing more than big businesses that strive to influence politics with direct pleas from the pulpit and massive contributions to political campaigns. Let us listen to James Madison, one of the most influential of our Founding Fathers and a great president. As he pleaded, let us impose property taxes on all religious institutions, and let us do so now.

Comments

[SarahTX2]

Another way is to look for a potential court case that has all the right conditions for getting a favorable ruling. Have to admit, it probably won't at the beginning be a Catholic Church case. However, the Mormons are very much out of favor in not only California, but also Texas. Is it legal for a religion in California to make massive contributions, such as was done with Proposition 8?

[abbeyroad]

But how do we take action to demand that religion is regulated and TAXED ?
How can a church be more powerful than the federal government ?

How do we get started ? Who do we light a fire under ?

I WANT MORMON, INC. TAXED (they're sitting on a $60 billion dollar empire).
they donate less than 2% of their money to outside chairty - WHY AREN'T THEY BEING TAXED ?

(and of course i want the catholic church, saddleback, and all the other shysters taxed, too).

[Jeff Schweitzer - Huffpost Blogger]

The only way is to make our views known to our representatives at the city, county, state and national levels. City and county officials are on the front lines of this issue. We need to tackle the issue one city and one county at a time. That, by the way, is how this can be politically feasible. We do not need a national concessus. We do it one jurisdication at a time.

[Retrofuturistic]

Mr. Schweitzer, I wonder why you didn't say the word "fascism". That is what regulating church finance would prevent the spread of. So I think that if we're going to fully articulate the problem, that we need to start saying the "f" word in relation to (the horror! the horror!) Christianity.

Anyway, whatever words you choose, we really do need to regulate religion as much as we need to regulate Wall Street, if not more.

[Jeff Schweitzer - Huffpost Blogger]

I would rather see a world in which religion simply had no role in politics at all; regulating religion would be difficult without crossing the barrier of confounding church and state from the opposite side of that coin. Religious organizations should be treated exactly like all others, with no exemptions or exceptions. We were founded as a secular nation, and our political systems should be completely blind and indifferent to religion. Government should not impact religion, and religion should not impact government.

[Isis N]

If only that were the case!

[JackNasty]

Taxing church property is only a beginning. It's time to repeal tax deductions for contributions to churches.

Yes, the Mormon Church used its tax-free facilities to raise $22 millions and organize an army of volunteer bigots to propagate malicious lies about tax-paying gay citizens in California. That 's not the only evidence that the Salt lake City based religious corporation has collected too much money at taxpayer expense. In Salt Lake City, the Mormon Church is currently spending billions to develop City Creek Center, a vast shopping center with luxury condominiums.

The Mormon's heavenly father's house does indeed have many mansions. Undoubtedly too many of those mansions are subsidized by the taxpayer.

[Jeff Schweitzer - Huffpost Blogger]

Churches across the country have grossly abused their tax exemptions. The Mormon Church is only the most recently visible example because of their inappropriate interference in California politics. That work alone should have the IRS crawling up their fannies, but don't hold your breath. The Catholic Church is every bit as bad, with vast real estate holdings and commercial operations.

[Retrofuturistic]

Thank you for saying this, Mr. Schweitzer. It needed to be said, and it needs to be acted on.

We are in the midst now of what happens when very far right-wing religious predators are permitted to accumulate the kind of wealth that gives them political power. Personally, I never again want to be where we have been for the last eight years, so I agree with you.

Tax churches. And put limits on how much wealth they can gain.

[abbeyroad]

not only did the mormon "church" lobby and fund the proposition, but all their little minions organized the grassroots effort.

they were the ones walking the neighborhoods, knocking on doors, leaving flyers, making the tv spots, shoving the "yes on 8" signs in their yards (many in UTAH yards), and phoning all their friends and family in california asking them to vote "yes".

they were VERY busy little bees.

[Jeff Schweitzer - Huffpost Blogger]

All blatant political activities that should immediately disquality them from any tax exemptions.

[abbeyroad]

" But I do think we have an opportunity to end the property tax exemption for religious organizations, particulalry when cities and counties are looking for every possible means of increasing revenue. Now is a good time to take on the churches on this subjec.t. They truly do not deserve the tax exemption ".

i agree 100% -- the timing is perfect --- but how exactly do we sieze the opportunity ?

[Jeff Schweitzer - Huffpost Blogger]

Start by writing to your representatives in your state and in D.C. Let them know how you feel.

[Dlukes]

This is one of the best articles I have read on this issue. I believe that the Church should pay property taxes. I realize that much of the churchs' policies have nothing to do with promoting the accuracy of God's word. If the Church would focus on the true teachings of Jesus Christ-then all the other issues regarding Abortion-h­omosexuali­ty, etc-will take care of themeselves. It was never intended by Jesus Christ for the Church to dominate politics. We forget that he stated"Render to Cesar what is Cesar and to God what is God". This is the next big issue in the 21st century. If churches are believing according to God's word and his promises then they do not need tax-exemptions. Tax-exemptions go against everything they represent. Great article! Courageous move to report something out of the box of what journalist are required to report due to societal pressures. Good job!

[Jeff Schweitzer - Huffpost Blogger]

I appreciate those kind words; thank you. While the quest to end this exemption would seem Quixotic to many, I believe the proposal has a great deal of support, even within the religious community. This really is an issue of fairness, and I believe many people recognize the injustice of the tax exemption.

Thanks for your comments.

[SillyGit]

CORRECTION.

The Mormon Church actively lobbied against and funded opposition to Proposition 8 in California.

is backwards. It should be:

The Mormon Church actively lobbied for and funded the efforts to put Proposition 8 on the ballot in California.

Prop. 8 adds an amendment to the CA Constitution that a marriage consists of a union between one man and one woman.

Excellent article Jeff.

[ORSunshine]

Just a point of clarity. You wrote: "The Mormon Church actively lobbied against and funded opposition to Proposition 8 in California­."

You meant, I'm sure, that the Mormon Church actively lobbied FOR and funded a campaign in FAVOR of Proposition 8 in California.

[Jeff Schweitzer - Huffpost Blogger]

Yes, thank you. That is exactly what I meant to say.

[AntiSocialite]

Amen Brother, but you can bet your bottom dollar that any talk of this by the Democratic leadership will result in a category 5 sh*tstorm from the right wing. Furthermore, it may be just the kind of thing that could solidify the infighting Republicans, by giving them all something to get behind. The fiscal conservatives would be opposed to it because they are pretty much against any and all taxation and the bible thumpers would be against it because it takes money away from the Almighty(Church, that is). While I agree with you one hundred percent on the issue, I am leery of the possible consequences.

That said, if there were a candidate with the political savvy to pull this off I think it would be Obama; so heres hoping for a little bit of common sense to bleed into the political world over the next few years.

Peace

[Jeff Schweitzer - Huffpost Blogger]

To all those who commented on the difficulties of addressing this issue: extremely difficult is not equivalent to impossible. Having worked at the White House for nearly 5 years, I understand the barriers to success on this issue. But two years ago most of us would have said we would never elect an African American president in our lifetime. Society does change. We no longer have spitoons in restaurants, smoking is banned in most public places, and litering is considered a crime. These changes required radical shifts in public behavior. Yes, taxing churches presents a host of extraordinarily tough problems, but these are extraordinary times. The rationale for abandoning the exemption is compelling. And we have a strong conservative pedigree of supporters; this does not slice nicely between liberal and conservative. Rehnquist was not exactly a bleeding heart. States, counties and cities are desperate for revenue. Maintaining the exemption makes no sense for all the reasons I laid out, and for all those additional reasons provided by the comments below. The proposal is not to start taxing churches; the proposal is to stop exempting them from a tax they should have been paying all along. This is a long road, but not the same as tilting at windmills.

[davism97]

Mr. Schweitzer: You might consider submitting an article like this to the Free Inquiry magazine (the publication of the Councit for Secular Humanism). It's definitely an appropriate topic and you might reach readers who don't frequent the Huff.

[Jeff Schweitzer - Huffpost Blogger]

I'll check it out. Thanks.

[zannamar]

Let's not forget the mega prosperity churches not that preach wealth and greed in the name of Jesus. Private airplanes and $20,000 marble vanities purchases shouldn't be tax exempt.

[mlaiuppa]

Good luck with that.

If you thought Social Security was the third rail, try taking away the tax exemption for churches.

The *only* way this is going to happen is if the IRS does it and then the Supreme Court backs them up. If you leave it to Congress to enact a law it will never happen. But if I interpret the article correctly, Congress doesn't need to *do* anything. It is simply a matter of the IRS regulations. So let them do it (and take the political fall.) Then when lawsuits happen (which they will) let it go before the Supreme Court (and let them take the political fall too.)

I'm all for it. I'm tired of churches meddling in politics and getting a free ride on my tax dollar. They're corporations and should pay their fair share like everyone else.

[LeftRight]

I've got an idea. All charities are now tax exempt, but churches are not. When they spend funds earned from other sources (whether they be donations in the plate or investments) on a charitable purpose, they must give the funds to a sub-organization which will be tax free. This will deduct from the taxes they owe, but it will not be 100%, as they are still running a business in a building. THAT would solve BOTH problems. The only concern that I would have is that maybe the parishioners would have to specify whether their donations to the church go to pay for the church or for the charity, so that they would be able to claim a tax deduction.

This way the priests would be able to preach from the pulpit, AND perform God's work on Earth!!