Recent history has been an anomaly for the US in regards to financial matters. We have born witness to market crashes, bank bailouts, historic budget deficits, insurmountable national debt, fiscal cliffs and now the latest frenzy, sequestration.
For those less familiar with this economic kraken, sequestration was agreed upon by Congress to incentivize the deficit reduction committee towards finding a fiscal solution. This ‘incentive’ comes in the form of heavy automatic slashes in universal federal funding.
In unsurprising fashion, a viciously partisan US Congress has failed to reach common ground on the $1 trillion in cuts over the next decade. The lack of compromise will therefore lead to an automatic, across the board, $1.2 trillion cut in defense and domestic programs starting March 1 if a compromise is not established.
With the ominous implications that the widespread cuts would bring, possibly shocking the economy into reversing any sort of recovery, it spurs a deeper exploration into where revenue can come from, and thus raises the question: should we tax religious institutions?
This idea is anything but novel, and historically we’ve leaned in favor of allowing churches to maintain their tax-exempt status.
In the 1970 Supreme Court case, Walz vs. Tax Commission of the City of New York, it was determined that the tax exempt status for religious institutions created a minimal connection between government and these organizations, thus best upholding separation of church and state.
The separation of church and state has been a pillar of American beliefs since creation, finding roots in our very first amendment, and has been reiterated time and time again, such as by the 1954 Johnson amendment that banned pastors from discussing candidates in the pulpit in scriptural context. But how separate are they really?
Despite various legal and regulatory barriers to prevent the breakdown of this ethos, we frequently see contradictions in our legislature and politics.
The legality of marriage between two people of the same sex is still under question because it allegedly defaces the sanctity of marriage in certain beliefs. We still have elected officials that seek outright abolishment of abortion on the basis that pregnancy is allegedly by divine accord. We still have disputes about evolution versus intelligent design in education because of religious convention.
Religion and policy are inherently correlated because of their moral influence. To refute any taxes on churches because it maintains disconnection of legislation and religion is naïve; we have already crossed that bridge.
With concern to tax policy on religious institutions there are several components to contemplate. If all church income and assets were considered, taxing these institutions has potential revenue in the ballpark of $71 billion according to Ph.D. Ryan Cragun of the University of Tampa.
We classify churches as charitable organizations. While many give generously, the qualifications for some are debatable. For instance, the Mormon Church has earned this title though it spends, roughly, only about 0.7 percent of its annual income charitably. Contrast this to, say, the American Red Cross who spends 92 percent.
Other organizations tote larger statistics; the United Methodist Church spends almost 30 percent on charity. To put this in scale though, Wal-mart spends about $1.75 billion annually in charity through food-aid, over 29 times that of the United Methodist Church and almost twice as much as the Mormon Church has in the last 25 years.
The money that churches, mosques, synagogues, etc. spend charitably should remain tax exempt, of course, but where is the line of public interest and private activities drawn? Are we creating separation of church and state? Or are we creating lofty and vague loopholes?
Former White House staffer Jeff Schweitzer valued church property in America at anywhere from $300 to $500 billion. This could create in excess of $7 billion in property tax revenue.
By excluding religious organizations from consideration in property taxation yet still enforcing their rights to property we effectively create a subsidy rather than disconnection from government and churches. One cannot possess a benefit of the collective while not bearing any burden and claim isolation, a relationship of preference has formed by definition.
To tax a religious entity is by no means a move against it or anything that it stands for. To separate and more explicitly identify what gets classified as charitable is to correct an oversight and serve the public of all faiths, or lack thereof.