I'm OK letting religious institutions keep their tax exemption, but we should make them adhere to the same standards as 501(c)(3) organizations (non-profits). A whole lot of churches would either start paying taxes, or expose themselves as frauds with those financial transparency requirements.
This doesn't work in practice, because of freedom of religion, freedom of assembly, and separation of church and state, ie. constitutionally guaranteed rights.
Taxing churches would then be a way for government to suppress and eliminate religion/religious organizations they do not like. Start taxing today with a "reasonable" tax, and tomorrow you can raise tax obligations until operation is unsustainable. A la "subsidize things you want more of, tax things you want less of".
Despite what non-religious and/or anti-religious people may want, this is untenable and almost certainly unconstitutional.
As an aside - the federal government has plenty of money. We don't need to go looking in the seat cushions for pocket change. Instead of "Reining in America's $3.3T Tax-Exempt Economy", we should be "Reining in America's Overindulgent Lifestyle and Runaway Spending Spree".
> Taxing churches would then be a way for government to suppress and eliminate religion/religious organizations they do not like.
I don't know what the IRS standards are for recognizing religions, but taxing unrecognized religions and not taxing recognized religions seems like a bigger potential for suppression of undesired religions than taxing all of them. That said, I don't think I've heard of a case where IRS/government refused to acknowledge a claimed religious organization?
Of course, you can't have free exercise of religion if it's taxed. I do think it'd be nice to have public tax returns or similar, but I guess that's really for the membership to demand more than the government.
> That said, I don't think I've heard of a case where IRS/government refused to acknowledge a claimed religious organization?
Perhaps illustrating your point, but worth noting anyhow: the dangerous for-profit cult of Scientology actually had to infiltrate the IRS with their own people to get their tax exempt status.
Except churches would still be tax-exempt. All they would have to do is make their finances public, so that the people donating money to them know what that money is going towards.
If they don't want their congregations to know how much they spent building a giant mall or buying private jets, then they can choose to pay taxes instead. If you don't think your congregation will care about the private jets, then by all means, keep your tax exempt status.
For example Texas once had a sales tax exemption for periodicals sold by churches that consisted solely of material to promulgate their faith, and the Supreme Court in Texas Monthly v. Bullock, 489 US 1 (1989) [1] said that such an exemption violated the establishment clause.
In Swaggart Ministries v. Cal. Bd. of Equalization, 493 US 378 (1990) [2] Swaggart contended that California's subjecting them to sales/use tax was unconstitutional. The Court said it wasn't.
Your post seems to be misleading. Both rulings focus on selling goods to non-members, which seems rightfully taxable.
This discussion is about taxing churches/religious organizations in general on all revenue/income (ie. tithe, donations, membership fees, etc). That would very likely be unconstitutional, as that would limit the organization's ability to assemble and practice religion.
> we should be "Reining in America's Overindulgent Lifestyle and Runaway Spending Spree".
If you’re interested in knowing where your federal tax dollars are going, put your numbers in and take a look. It’s possible this is the most productive thing Intuit has ever done.
I don't think this holds water, especially when the default behaviour is to just treat them like any other business. You could make this absolutely dead simple by exempting donations from tax but taxing all other forms of income and removing all deductions.
My problem is the lack of transparency with how donations are handled. Many churches primary source of income is donations, which they turn around and spend on private jets, lavish clergy salaries, or even for-profit endeavors like giant shopping malls.
Because churhces are exempt from all the transparency required of normal nonprofits, they can easily mislead their congregations about how that donated money is spent.
If someone decides to switch churches because they found out that most of the money they donated was not actually going towards charitable causes, that would be an absolute win in my book.
> Many churches primary source of income is donations, which they turn around and spend on private jets, lavish clergy salaries, or even for-profit endeavors like giant shopping malls
You're describing maybe a dozen or less mega-churches - not the thousands and thousands of typical churches.
I personally don't really care how donations are handled, as they should mostly be after tax dollars. I care quite a lot about the tax sheltered growth and the avoidance of property tax most churches in most places receive though.
You could start an organisation to do exactly that and it would qualify.
Being “tax exempt” doesn’t really change much… you can offer a tax deduction to wealthy donors. Most people aren’t that wealthy and don’t care about tax deductions.
You can’t conduct business and not pay income tax on it (that’s Unrelated Business Income, which the article talked about). All you can do is collect donations, grants, etc. and then use that to further your organisation’s purpose.
I would love to see lots of nonprofits organised which have philosophical/political conversations at a local coffee shop once a week!
I think you’re right, but it’s probably better to try and remove their exemption and then settle on this. They’ll scream either way because unethical hucksters will do anything to keep fleecing people.
It might make them feel even more empowered to inject their religious beliefs into politics. Nowadays there is a paper thin pretend curtain around that, I believe, due in part to tax exemption.
There is a loophole where a religious organization doesn't even have to file any paperwork with the IRS to establish its tax exempt status. While $5,000 doesn't sound like a lot, that limit was probably set many years or decades ago and never adjusted for inflation (so the original intention could well have been a much higher level of revenue).
"Tax Exempt Organization Search (Pub. 78 data) is based on information received in applications seeking recognition of exemption under Internal Revenue Code section 501(c)(3). Churches, their integrated auxiliaries, conventions or associations of churches, and public charities whose annual gross receipts are normally not more than $5,000 may be treated as tax-exempt without filing an application. Also, many churches are included in group exemptions (see below). Thus, they may not be listed in Tax Exempt Organization Search (Pub. 78 data)."
Congress is authority-exempt from making laws that can apply taxes to them in the first place.
It's not like we tax everyone, then exempt religious organizations; the "everyone" that is able to be taxed does not include establishments of religion in the first place, thanks to the wording of 1A.
