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.” Since then the Bob Jones reasoning has not been extended to other kinds of discrimination, but that does not mean it couldn't be. I do not have much fear against losing the privileged status of churches with regard to taxes for any reason EXCEPT for the enforcement of social policy.
The sad fact is that we have grown fat and lazy on the tax exempt diet that has allowed us to indulge ourselves and presume that this privilege is a guaranteed right. We have not been faithful stewards and so the incomes of many congregations, many church institutions, and the national offices of our denominations have hit hard times. Christians no longer are bound by the tithe in legalistic terms but this freedom has left us lazy and weak. Christians give upon average 2-3% of their incomes -- we have abused the freedom to do less instead of more. And so congregations, church institutions, and denominational offices and programs have been forced to cut back, to find other funding sources, and to depend upon both the tax exemptions and federal money we can use as much as possible to do the social work we do. It has not served us well because we have been left weak and vulnerable to the threat and whim of a government which seems poised to enforce social policy even while protecting the right of worship.
According to a piece in TIME:
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.
We must admit that we have become addicted to the state and federal tax exemptions and have not been as faithful in our giving or our stewardship of the many resources churches have accumulated and now we may find ourselves victims of our own self-indulgence. While I am not at all advocating that we succumb to those who wish to strip such exemptions and take away tax benefits for religious contributions, I do not believe we should let ourselves be vulnerable to the pressure. We need to shore up our giving habits, dispose of properties we do not need, and become leaner but stronger fiscal entities. For years the federal government has influenced us by the offering of federal, state, and local dollars in support of things deemed beneficial but non-sectarian. We ended almost all hospital sponsorship, closed orphanages and adoption agencies, and adapted religious programs to remove religious content in order to hold on to this money too long. If we believe it is good to do and an expression of witness and mercy inherent to our Christian identity, we Christians need to carry the full freight of it all so that if and when the government takes back some of the privilege, we will not be rendered helpless and powerless to continue. This is not the best face of Christianity -- weak, vulnerable, and dependent upon the whims of government to protect our tax exemptions, our religious property exemptions, and the tax benefit for charitable giving.
"For years the federal government has influenced us by the offering of federal, state, and local dollars in support of things deemed beneficial but non-sectarian. We ended almost all hospital sponsorship, closed orphanages and adoption agencies, and adapted religious programs to remove religious content in order to hold on to this money too long." I have not looked at our tax exempt status as a driving force for doing less.........I pray that this knowledge will help me to do better from this day forward.
ReplyDeleteThe author of the Time article is wrong. Tax exemption of churches did not begin at the dawn of the 20th century. It is as old as this country. To be sure, it was only at the dawn of the 20th century that donations to churches could be deducted from one's income tax--but that was because there was no income tax until then! But exemption from property tax goes back much, much further. Churches were not taxed in Europe from the days of Constantine and Theodosius I. Some dissident churches were taxed in post-Reformation Europe, but that practice was eventually abandoned in the New World as discriminatory. Thus, if anyone tried today to distinguish between "good" churches with an "acceptable" theology that could be tax-exempt and "bad" churches with an "unacceptable" theology that should be tasked, they would run afoul of the free exercise clause of the First Amendment.
ReplyDeleteFurthermore, if churches and religious organizations were taxed and other not-for-profits were not, churches would soon make a (successful) appeal to the Supreme Court. It would clearly violate the free exercise clause of the First Amendment. You can't exempt, for example, a library devoted to promoting books while taxing a church devoted to the Good Book. You can't exempt a community-run hospital while taxing a hospital run by a community of faith. And, as the most secular and anti-church people already probably know, their most cherished institutions would fold more quickly than churches would. Hence I don't think that we are likely to see the Time's proposal go in place.
I should add that we tax what we do not want--or at the very least what we are willing to see disappear. (Hence the old adage that "the power to tax is the power to destroy.") We began taxing income in the early 20th century because we wanted to stop the "robber barons," who were amassing great heaps of revenue from their companies. We tax property because we want to discourage people of limited means from owning real estate and leave such matters to those who can afford its upkeep. We used to have high tariffs because we wanted to restrict imports. Therefore, churches have been exempt from taxation as a matter of principle because it would be a violation of the free exercise clause.
ReplyDeleteBy the way, I should point out that contrary to popular opinion, pastors DO pay taxes. Not only do they pay their full share of the income tax, they are also required to pay twice as much Social Security tax as the typical employee does. (This is because they pay both the employer's and employee's half of the FICA tax.) And if a church were to get into a for-profit business (such as renting out their fellowship hall or running a for-profit daycare center), they are liable to taxation (property, income, etc.).
I know Pastor Peters' point was that we shouldn't count on having a tax-exempt status for our churches and our institutions, but should be prepared to ask donors to pay the extra tax bills, if we should get them. But there is a case to be made that such taxation would violate the First Amendment, and we should be prepared to make that case.
James Kellerman makes several good points about tax exemptions for churches and for church contributions and any attempt to remove such tax exempt status.
ReplyDeleteI would also note the irony of having the column, "The soft underbelly of American Christianity...", with all of the reported statistics on church contributions, immediately following a column, "Keeping the Wrong Statistics..."
Did you all miss my point? We can barely keep up with what we do now with the dollars given on Sunday morning. The possibility of removing or reducing the tax exemptions enjoyed by churches and those who contribute would probably reduce our income even more. My point was not simply to draw attention to the tax issue but to the fact that the majority of Christians do NOT give even close to 10% (the minimal standard of the old covenant) and that churches are suffering for our lack of giving. If the discussion of our tax exemption stirs us up, I hope it will encourage us to face up to the giving problem more than merely fight those who would tax church income, property, and contributions.
ReplyDelete"My point was not simply to draw attention to the tax issue but to the fact that the majority of Christians do NOT give even close to 10% (the minimal standard of the old covenant) and that churches are suffering for our lack of giving."
ReplyDeleteHow has that percent giving number changed over the last half-century, and particularly how has it changed for the Missouri Synod? Perhaps, instead of a concern about the tax exemption being removed, this might be of concern to the members of the Missouri Synod:
Between 1970 and 2013 (the latest available data), the number of Missouri Synod member congregations has increased 1.8 percent per decade, the number of ordained members has increased 7.4 percent per decade, and the number of congregational members has decreased 5.2 percent per decade.
Whether or not one considers them to be relevant to the Evangelical Lutheran Church or to the invisible Church, these decadal percent changes cannot all continue at their same rates.
In fact, in the past decade (2004-2013), the number of Missouri Synod member congregations has decrease 0.4 percent, the number of ordained members has increased 6.2 percent, and the number of congregational members has decreased 13.1 percent.
Based on information from past Reporter Online articles, the LCMS average annual giving per person went up by 30 percent between 2003 and 2013, from $505 to $656.
ReplyDeleteHowever, the cumulative inflation from January 2003 to December 2013 went up by 28.3 percent. Furthermore, from a graph of household income over the past 50 years, in the past decade the income in all percentiles has been flat or even decreasing.
The big question - and the elephant in the room - is why, given the exemption, members don't give more. Maybe yhat should be the topic of a follow-up post.
ReplyDeletePerhaps people don't give properly because they are not taught properly. I suspect too many LCMS folks would be afraid that it would be just too much law.
ReplyDelete"The big question - and the elephant in the room - is why, given the exemption, members don't give more."
ReplyDeletePerhaps some members do give more, but to other Lutheran activities, like Lutheran Heritage Foundation, Lutherans in Africa, or some RSOs, or directly to LCMS missionaries.
I agree with Pastor Peters that we Christians should be much betters stewards of our financial support toward the Church, and yet there is a struggle here between Church and State that goes back to Constantine. Tax exemption under our First Amendment is designed to prevent government control over religion based on the power to tax property and organizations. State and Federal governments are prohibited from establishing a religion and from hindering the free exercise of religion. The Supreme Court's ruling on Bob Jones University involved too much government involvement in religion. This case set a precedent for more government involvement with religious institutions.
ReplyDeletePastor Peters, I understand (and indicated as much in my second post) that the article wasn't about the tax exemption per se. But, really, bad stewardship is not new or newsworthy. You can go back all the way to Judges 17-18, two generations after Moses, and you'll see that clergy had to take up side jobs (such as being a household chaplain) in order to make ends meet. So it is clear that lousy stewardship is a problem of both testaments. The tithe may have been mandatory in the Old Testament and not so much in the New, but in both eras the tither has been a rare bird.
ReplyDeleteSo rather than address what is really an old story (bad stewardship), I chose to challenge the premise of the Time article, namely, that churches have only recently been exempted from taxes. I also wanted to address the implied premise that churches will soon lose their tax exemption. The former idea is a cherished belief of the Left; the latter, of the Right. But neither is grounded in history or jurisprudence.