Church Tax Exemption: Blessing or Obstacle?

The first recorded tax exemption for churches was during the Roman Empire, when Constantine, Emperor of Rome from 306-337, granted the Christian church a complete exemption from all forms of taxation following his supposed conversion to Christianity circa 312.

Within the United States, churches received an official federal income tax exemption in 1894, but they have been unofficially tax-exempt since the country’s founding. The United States is the only country around the globe that currently offers tax exemption for churches. Additionally, the USA is the only nation that affords a tax deduction for those that tithe or donate to churches. 

Is it time for the Church to seriously consider “voluntarily” ending their tax-exemption (non-profit) status? 

Governments have traditionally granted this privilege to churches because of the positive contribution they are presumed to make to the community, but there is no such provision in the US Constitution. However, if the tax exemption were removed and the government started taxing churches, the government would then be empowered to penalize or shut them down if they default on their payments. The US Supreme Court confirmed this in McCulloch v. Maryland (1819) when it stated: “the power to tax involves the power to destroy.”
 

Congressional Committee Meeting – 19 Sep 2019

However, the debate continues over whether or not these tax benefits should be retained. During a hearing in the House Ways and Means Committee on 19 Sep 2019, Democrats spent almost three hours vociferating on “How the Tax Code Subsidizes Hate.” Vocally, they were speaking about and pointing fingers specifically at the Christian Church and Christian organizations that they argue are “subsidized by the tax payer” to spread hate about LGBTQ, immigration and a few other agenda items. Their solution? Strip mainstream Christian organizations — and anyone else guilty of the Democrats definition of “hate” — of their tax-exempt status.

There was no verbal mention of other religious organizations, only Christian organizations. Just for a second, let’s remove the tax exempt portion of the discussion and review this from the lens of who the Democrats were speaking out against. The three hour debate was a vieled threat and attack against the Christian Church and Christian Organizations. This appears to demonstrate how the Democratic platform continues to show itself as anti-God and anti-Scripture while forging forward on their path towards legislating behavior and legislating beliefs through fear and coercion. However, the democratic majority did rely on a list given to them from the Southern Poverty Law Center (SPLC), which listed mainstream churches as hate organization. The truth is that the SPLC is a liberal front and routinely attacks conservative organizations that are socially skewed as Christian. More on the SPLC later.

 

We MUST briefly talk about Christian love, since Hate has been brought to the forefront.

How we believe we are loved will determine how we love; conversely, how we love will influence how those around us love and how those around them love. This means that the consequences of how we love will stretch far beyond our perception in both time and space. This might be a bit deep. This is why it is critical WHOM your god, our Christian God, says we should love.

True Christian love is perfectly outlined in the most fully developed commands directly from the words of Jesus from Matthew 22:37-39:

And He said to him, “‘You shall love the Lord your God with all your heart, and with all your soul, and with all your mind.’ This is the great and foremost commandment. The second is like it, ‘You shall love your neighbor as yourself.

True Christians should not hate. Jesus told us that the Great Commandments above all others is to love our God and love our neighbor – regardless of persuasion and affiliation. If you are a Christian and spread hate about the people that are living in an LGBTQ lifestyle, then you are scripturally wrong. If you speak out in hatred towards those classified as “illegal immigrants”, then you are scripturally wrong. This does not mean that you should not, or cannot, speak about policies that are geared to such cultural topics as LGBTQ or immigration – this is being a steward as a citizen of the country in which you reside. But, the democrats have made it a point to categorize anyone as a “hater”, even if speaking out against policy decisions or cultural mistakes while simultaneously loving on people. This is the rub….

Nonetheless, we are told to speak out in love, not hate. It is ok to speak out against policies as long as you speak out in truth and ensure that your heart is focused on the love of God and His people – all people.

One of the most emphasized virtues in the Bible is to love the truth, and to tell the truth. In Galatians 4:16, Paul the Apostle asked a rhetorical question, “Am I therefore become your enemy because I tell you the truth?” – this question has become an accurate descriptor for a large segment of the culture today. Sometimes, speaking the truth even if not popular is love. Jesus did it, we should to. Nonetheless, check the condition of the heart.

 

Christian Hate Groups?

In 1947, the US Supreme Court ruled in Everson v. Board of Education that “No tax in any amount, large or small, can be levied to support any religious activities or institutions, whatever they may be called, or whatever form they may adopt to teach or practice religion.”

On 19 Sep 2019, the Democratic majority committee said they were concerned about the government subsidizing groups that millions of Americans would find abhorrent and Republican minority said they feared that First Amendment rights could be infringed ending some groups’ tax-exempt status. The committee members focused on 60 groups that have been designated as “hate groups” by the SPLC. The Family Research Council is included on that list.

Also on the list are mainstream church organizations, on a list that also includes KKK affiliated groups. Former SPLC spokesman Mark Potok recently revealed an animus against organizations on the list. He said the SPLC’s “aim in life” is to “destroy these groups.”

The Alliance Defending Freedom (ADF) is also among the more than 60 tax-exempt “hate groups” that attracted the Democrats’ ire. The ADF is the legal organization that defended the cake baker from Colorado in front of the US Supreme Court as well as other faith based organizations being discriminated against.

The Supreme Court has repeatedly made clear that tax exemptions can’t be denied based on the viewpoint that a group communicates. In Speiser v. Randall (1958), the Supreme Court upheld a property tax exemption to people and organizations that advocated the overthrow of the U.S. government. The Tax Code may indeed subsidize hate, just as it subsidizes Socialism, Satanism, and a wide variety of other dangerous and offensive ideas. Under the First Amendment, tax exemptions have to be distributed without discrimination based on viewpoint; that means that evil views have to be treated the same way as good views.

If we are a true Pluralist culture, then Christians that desire to maintain tax exempt status must accept the idea that opposing organizations, such as the Church of Satan, will also qualify for tax exemption under 501(c)3. Of course, the IRS should not provide tax exemption for organizations that incite violence against individuals or groups of people. Such organizations are already illegal. But attempts to get the IRS to blacklist “hate groups” would have devastating consequences, even without the SPLC’s bias involved.

 

Small churches, already struggling to survive, would be further endangered by a new tax burden.

A 2010 survey by the Hartford Institute for Religion Research found that congregations facing financial strain more than doubled to almost 20% in the past decade, with 5% of congregations unlikely to recover. If these churches were obliged to pay taxes, their existence would be threatened and government would thus be impeding religious expression.

The law against churches intervening in political campaigns was passed by the US Congress in 1954. Since then, the Internal Revenue Service (IRS) has been successful in using the law to revoke the tax-exempt status of only one church: the Church at Pierce Creek in Binghamton, NY, which had placed an advertisement in USA Today and the Washington Times rebuking Bill Clinton four days before the 1992 presidential election.

Some Pastors simply refrain from talking about cultural issues – this is the safety zone. By refraining from talking about culture they have no fear from the tax man, AND, they have no fear of offending congregants that may have hold different points of view.  It is not about being confrontational, we can talk about cultural issues with both “Respect and Love”. Holiness is separation from sin, not separation from sinners. Put another way, holiness does not mean separation from people in the culture around us, but separation for the sin in culture around us.

We need more cultural engagers and we need more churches to engage. However, we should judge culture based on solid biblical principals in order to both heal and inform – not condemn people to hell or judgement. That we should leave to God.

 

Global Taxation?

A vast majority of Americans may not realize that the USA is the only nation that currently offers tax exemption or benefits when it comes to religious organizations. Many European countries, for example, have religious taxes. In some cases, such taxes are voluntary while in other countries taxpayers have the option to divert a certain percentage of their income to either a religious group or the state. In many cases, the churchgoer pays the tax as part of their personal income taxes and the government passes the money along to the church. A few examples as outlined by Pew Research:

  • In Italy, taxpayers pay an “eight per thousand” tax (0.8%) and express their preference for whether the money should go to one of the religious groups listed (including the Catholic Church, several Protestant groups and the Jewish community) or the state.
  • Spanish law “provides taxpayers the option of allocating a percentage of their income tax to the Catholic Church but not to other religious groups,” according to the U.S. State Department.
  • The Evangelical Lutheran Church in Denmark – the country’s national church – receives funding through a specific church tax imposed on members and also receives additional support from the Danish government. Denmark reports that nearly 80% of its people were church members as of 2012.
  • Two other northern European countries – Sweden and Finland – also collect church taxes from members, both at rates that range from 1% to 2%.
  • In Switzerland, church taxes are imposed at the canton level; most of the 26 cantons, or states, collect a church tax in some form. In some cantons, private companies must pay a church tax, according to the State Department, which also reports that some cantons collect taxes “on behalf of the Jewish community,” but that “Islamic and other ‘nontraditional’ religious groups are not eligible.”
  • Iceland’s church taxes are collected from members of registered religious groups – including secular humanist organizations.
  • Croatia finances the salaries and pensions of clergy and the running of church schools and universities, and it maintains and restores church sacral objects and buildings.

In some of these countries, there are churches that will only serve those who have paid up. For instance, the Catholic Church in Germany has forbidden those who do not pay their church taxes from receiving communion.

My answer – tax exemption gives the government control over what churches can preach about the Gospel as it relates to culture and government. While the IRS would have control to shut churches down that cannot pay their taxes (if tax exemption were removed), we cannot allow the government to control the Gospel message. There is nothing in Scripture that indicates Churches should be tax exempt, only that they should pay taxes when they are called for (Matthew 22:21).
Perhaps it is time for the Church to remove itself from 501(c)3 tax exemption and operate just as other business organizations operate. Or, at a minimum, it is time for Church’s to consider investments into for-profit businesses if tithes and offerings suffer if tax exemption is removed. Just a thought – this is how the Church operates in most countries around the globe.

The problem – too many tax paying citizens across the US have been spoiled by the tax exemption. Some have unfortunately lost focus on the heart as the source for our giving.

2 Corinthians 9:6-7 (ESV) – The Cheerful Giver

“The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.”

 

References:

https://www.washingtonexaminer.com/policy/economy/house-democrats-call-for-stripping-tax-exempt-status-from-60-hate-groups

https://www.frcaction.org/updatearticle/20190920/ways-means

https://waysandmeans.house.gov/legislation/hearings/how-tax-code-subsidizes-hate

https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=109958

https://www.pewresearch.org/fact-tank/2014/09/22/in-some-european-countries-church-membership-means-paying-more-taxes/

https://www.gosanangelo.com/story/opinion/contributors/2017/02/15/tax-exemption-gives-government-control-over-churches/97571818/

https://www.forbes.com/sites/robertwood/2012/09/19/if-47-dont-pay-taxes-lets-tax-churches/#434c9eed554b

https://www.fhghministries.org/the-johnson-amendment-of-1954/

https://www.christianitytoday.com/edstetzer/2015/february/3-ways-christians-will-address-cultural-issues-in-coming-ye.html

Keith S. Blair, JD. (Feb 2009), Praying for a Tax Break: Churches Political Speech and the Loss of Section 501c3 Tax Exempt Status, Denver University Law Review

Averil Cameron, PhD. (2005). The Cambridge Ancient History, Volume 12: The Crisis of Empire, A.D. 193-337, histories.cambridge.org

Sophie Lunn-Rockliffe, PhD. (17 Feb 2011). Christianity and the Roman Empire, bbc.co.uk