Now’s the Time To End Tax Exemptions for Religious Institutions
Mark Oppenheimer @markopp1 June 28, 2015
Mark Oppenheimer writes the biweekly “Beliefs” column for The New York Times and is editor-at-large for Tablet. He also reports for The Atlantic, The Nation, This American Life, and elsewhere.
The Supreme Court's ruling on gay marriage makes it clearer than ever that the government shouldn't be subsidizing religion and non-profits
Two weeks ago, with a decision in Obergefell v. Hodges on the way, Sen. Mike Lee of Utah introduced the First Amendment Defense Act, which ensures that religious institutions won’t lose their tax exemptions if they don’t support same-sex marriage. Liberals tend to think Sen. Lee’s fears are unwarranted, and they can even point to Justice Anthony Kennedy’s opinion in Friday’s case, which promises “that religious organizations and persons [will be] given proper protection.”
Let’s stop there. Justice Kennedy’s rebuttal was not what many think it was. Let’s read that in its full context:
“[I]t must be emphasized that religions, and those who adhere to religious doctrines, may continue to advocate with utmost, sincere conviction that, by divine precepts, same-sex marriage should not be condoned. The First Amendment ensures that religious organizations and persons are given proper protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths, and to their own deep aspirations to continue the family structure they have long revered.”
Notice what is missing. Chief Justice Roberts puts it this way: “The majority graciously suggests that religious believers may continue to ‘advocate’ and ‘teach’ their views of marriage. The First Amendment guarantees, however, the freedom to ‘exercise’ religion. Ominously, that is not a word the majority uses.”
So for Oppenheimer to glibly put off legitimate concerns by citing Kennedy’s single paragraph doesn’t exactly quell the fears of many who realize he left out an awful lot of available words. You see, religion is not just about teaching, worshiping and advocating. To truly have religious freedom, you must be able to live out the consequences of your convictions so you conscience is not violated. It is quickly becoming, though, in the eyes of liberals it seems, what people do privately in their worship space.
But I don’t think Sen. Lee is crazy. In the 1983 Bob Jones University case, the court ruled that a school could lose tax-exempt status if its policies violated “fundamental national public policy.” So far, the Bob Jones reasoning hasn’t been extended to other kinds of discrimination, but someday it could be. I’m a gay-rights supporter who was elated by Friday’s Supreme Court decision — but I honor Sen. Lee’s fears.
I don’t, however, like his solution. And he’s not going to like mine. Rather than try to rescue tax-exempt status for organizations that dissent from settled public policy on matters of race or sexuality, we need to take a more radical step. It’s time to abolish, or greatly diminish, their tax-exempt statuses.
Can I ask an obvious question? How is what Oppenheimer proposes a solution? Am I missing something? Mike Lee is offering a solution for a legitimate fear. Oppenheimer isn’t offering a solution. He’s just offering a devastating blow to scores of non-profits that are already hanging by a thumbnail. The problem is precisely rooted in claims of discrimination and losing one’s tax-exempt status. So how can just getting rid of said status be considered a solution? The problem is losing one’s tax exempt status. Taking it away pre-emptavely isn’t a solution. That’s like popping a kid’s football before loses it.
The federal revenue acts of 1909, 1913, and 1917 exempted nonprofits from the corporate excise and income taxes at the same time that they allowed people to deduct charitable contributions from their incomes. In other words, they gave tax-free status to the income of, and to the income donated to, nonprofits. Since then, state and local laws nearly everywhere have exempted nonprofits from all, or most, property tax and state income tax. This system of tax exemptions and deductions took shape partly during World War I, when it was feared that the new income tax, with top rates as high as 77%, might choke off charitable giving. But whatever its intentions, today it’s a mess, for several reasons.
Why would we blow off the intentions for the law? It seems to me understanding the intentions of the law are critical to understanding his “solution.” Why would the government end encourage this kind of giving? To spread the workload! What has happened since is that the government is so involved in every kind of social activity, it now doesn’t need the church’s charity. It is the welfare that the church once provided. But the intentions were to encourage charity, and they still are. At least in theory, don’t we still believe in charity? Perhaps more importantly, don’t we still think the society benefits from worshiping and obeying God? Now we’ve hit the raw nerve. We don’t believe that anymore, really. To people like Oppenheimer, a life with or without God is equally valid, no difference at all, no reason to encourage the church. They just view it all as one big marketplace. Once we lose the view that the society at at large is better off with God, you had better believe that churches will lose their tax exemptions.
First, the religious exemption has forced the IRS to decide what’s a religion, and thus has entangled church and state in the worst way. Since the world’s great religion scholars can’t agree on what a religion is, it’s absurd to ask a bunch of accountants, no matter how well-meaning. You can read part of the IRS’s guidelines for what’s a bona fide religion here; suffice it to say that it has an easier time saying what’s not a religion. The site gives the example of the rejection of an application from an “outgrowth of a supper club … whose primary activities were holding meetings before supper, sponsoring the supper club, and publishing a newsletter” but which professed a religious doctrine of “ethical egoism.”
Well, I agree its a hard position for the IRS to be in. It does have to draw lines. And we used to be able to agree! There was a time when Scientology would never have received recognition as a religion. But as a society, we caved. We have refused to draw the line of what at least attempts to recognize the true God…because we don’t believe in God anymore. We don’t link him to revelation and history. That’s all up for grabs. And this is what we get Scientology…er science fiction…getting a tax break. It is an offense to be sure.
On the other hand, the IRS famously caved and awarded the Church of Scientology tax-exempt status. Never mind that the Scientology is secretive, or that it charges for its courses; or that its leader, David Miscavige, lives like a pasha. Indeed, many clergy have mid-six-figure salaries — many university presidents, seven-figure salaries — and the IRS doesn’t trouble their tax-exempt status.
Yes, and aren’t many of those universities public institutions? What about a group like Planned parenthood, who apparently sells the “tissue” of aborted fetuses?
And many churches and synagogues sit on exceedingly valuable tracts of land (walk up and down Fifth Avenue to see what I mean). The property taxes they aren’t paying have to be drawn from business owners and private citizens — in a real sense, you and I are subsidizing Mormon temples, Muslims mosques, Methodist churches.
Okay, here is where my head explodes. This is said by someone who assumes that the taxes these churches aren’t paying ought to be paid and therefore have to be made up by other businesses. How is this even logical? Did it ever occur to him that the government could simply do with less? Did it ever occur to him that the government, since these laws were enacted planned budgets around the income they received, not income they wouldn’t receive, then having to raise taxes to make up the difference?
Does he realize exactly how little it matters that a church is on a valuable tract of land? It only has value if you’re selling it, or climbing a property ladder. Being worth a lot doesn’t do anything for a church, except make them targets of lawsuits and drastically raise their insurance premiums.
But his assumption that taxpayers are subsidizing these charities because they don’t pay taxes is simply false. It’s not like these churches don’t pay for water or electricity or gas. They simply don’t pay property tax on property that they owned before the taxes even existed. Therefore, no city or state has ever planned on revenue from them. Therefore, there is no lost revenue. Therefore you are not subsidizing anything.
Let's think about it another way. We complain about corporate greed, about the Enrons of the world, etc. Should we force churches and synagogues on Fifth Avenue to close if those institutions are the very thing that might prevent corporate greed? Is he so stupid as to not realize the role that religion plays in the lives of many "corporate titans", that religion in the city is a very good thing for us all? Oh sure, New York would get a few more tax dollars to squander, which would make no difference in the lives of anyone. But don’t be surprised when the guy who used to go to the Reformed church on Fifth Avenue runs a stock scheme later because his religious voice was taxed into oblivion. Oppenheimer is way too optimistic that human beings will do the right thing without a religious voice and conscience in the world.
We’re also subsidizing wealthy organizations sitting in the middle of poor towns. Yale University has an endowment of about $25 billion, yet it pays very little to the city of New Haven, which I (as a resident) can assure you needs the money. At the prep school I attended (current endowment: $175 million), faculty houses, owned by the school, were tax-exempt, on the theory that teachers sometimes had students over for dinner, where they talked about history or literature or swim practice.
Okay, Yale university has a lot of money. So what? Does this guy not understand that the vast amount of churches and non-profits are barely getting by? Does he care? To compare a congregation to a university with a $25 billion is a laugh.
Meanwhile, although nonprofits can’t endorse political candidates, they can be quite partisan and still thrive on the public dole, in the form of tax exemptions and deductions.
Churches don’t thrive on the public dole. Not paying taxes is not the same as receiving money unless in your warped world you believe that money not given to the government is the equivalent of the government paying out. That is a frightening mindset if that is Oppenheimer’s.
Conservatives are footing the bill for taxes that Planned Parenthood, a nonprofit, doesn’t pay — while liberals are making up revenue lost from the National Rifle Association.
No, his assumptions are totally backwards! The government actually does fund Planned Parenthood. Does it give money to the NRA? Exempting the NRA from taxes is not the same thing as footing the bill for Planned Parenthood. At least, not on the planet Earth. Perhaps that is Pluto's fiscal policy. Can NASA tell us that? His assumptions are so backwards that he cannot possibly come to sane conclusions.
I could go on. In short, the exemption-and-deduction regime has grown into a pointless, incoherent agglomeration of nonsensical loopholes, which can allow rich organizations to horde plentiful assets in the midst of poverty.
Perhaps there are some rich institutions that hoard money and they are surrounded by poverty. Like where Oppenheimer got his degree which led to him getting his job at Time Magazine. In my world, that would make him a hypocrite. But it isn’t the right of some people to determine how much money is fair and proper for private institutions to have. At least, that used to be true in America.
Defenders of tax exemptions and deductions argue that if we got rid of them charitable giving would drop. It surely would, although how much, we can’t say. But of course government revenue would go up, and that money could be used to, say, house the homeless and feed the hungry. We’d have fewer church soup kitchens — but countries that truly care about poverty don’t rely on churches to run soup kitchens.
Is he really so naive? As if that money would go anywhere but into an unaccountable government slush fund. By the way, we’ve been housing the homeless for 50 years in this War on Poverty. We’ve spent trillions and the poverty rate has stayed the same. Bang for buck, there is no doubt that religious charities that hold the recipients of their good will accountable have a far higher and more humane success rate.
Exemption advocates also point out that churches would be squeezed out of high-property-value areas. But if it’s important to the people of Fifth Avenue to have a synagogue like Emanu-El or an Episcopal church like St. Thomas in their midst, they should pay full freight for it. They can afford to, more than millions of poorer New Yorkers whose tax bills the synagogue and church exemptions are currently inflating.
Again, the assumption that no paying taxes automatically requires others to pick up the slack is false. There are other options, like the government doing with less. And these are not average congregations. Most congregations have budgets of around $200,000, with 1-2 staff people, a ton of volunteers, on land that is probably not worth close to $500,000.
So yes, the logic of gay-marriage rights could lead to a reexamination of conservative churches’ tax exemptions (although, as long as the IRS is afraid of challenging Scientology’s exemption, everyone else is probably safe).
And I guess that is our saving grace, isn’t it?
But when that day comes, it will be long overdue. I can see keeping some exemptions; hospitals, in particular, are an indispensable, and noncontroversial, public good.
Oh really? Does this guy know how much money doctors make? What about hospital administrators. They practically swim in their money like Scrooge McDuck! Is he really saying we should let them keep their exemptions when doctors make so much money? Is that really moral, Mr. Oppenheimer?
And localities could always carve out sensible property-tax exceptions for nonprofits their communities need.
And who determines that? What a lame olive branch here at the end. He begins by saying end all tax exemptions for non-profits. Except for hospitals. And nonprofits their communities need. Did it ever occur to him that communities need churches? For what will “solve” the problems of this world is faithful Christian discipleship. There’s my assumption. A right relationship with the holy revealed God of the Bible is a cure for social problems. But he thinks the only non-profits that matter are those that try to end homelessness and abort children. Is that about right? So as long as they’re non-profits that you like, Mr. Oppenheimer, they’re cool? Boy, that’s a lot of religious freedom! Thanks!
But it’s time for most nonprofits, like those of us who faithfully cut checks to them, to pay their fair share.
Gotta love the ol’ “fair share” line. Mr. Oppenheimer, Stalin, Mao and Huey P. Long called and they wants their propaganda back.
Let me say this. There is no divine right to tax exempt status or charitable deductions. For that matter, I don’t think there are rights to lots of things. But it is a question of what we want to encourage. Taxes are like the gas pedal and the break in society. Cigarettes = bad. Churches = bad. Planned Parenthood =