By Pastor Travis Berg
Recently, I’ve seen quite a few memes arguing for the taxation of churches.
These memes have pictures of mansions or of Joel Osteen on them. So, I thought I’d write a “little” post on tax exemption for churches.
First, the meme is a fallacy. Even if you believe that Joel Osteen and other megachurches have abused the church’s tax exemption, that doesn’t mean that the whole idea of church tax exemption is bunk.
A good rule for this is “abusus non tollit usum,” or “The abuse does not destroy the use.” Or, to use a different cliché, “Don’t throw the baby out with the bathwater.”
The church’s tax exemption has a long history in the US. Tax exemptions of different types were common in the Colonial period. After the Revolution and the ratification of the Bill of Rights, most states retained these exemptions. State and local governments continue to exempt churches from local taxation. In 1913 the federal government embraced this trend by exempting churches and other religious organizations from federal taxation in the modern federal tax code.
Oh, and by the way, tax exemption is neither sponsorship of religion nor a subsidy for churches. Chief Justice Warren Burger wrote that “the grant of a tax exemption is not sponsorship since the government does not transfer part of its revenue to churches but simply abstains from demanding that the church support the state.”
But just because something is old doesn’t mean we ought to follow it. Why are churches tax exempt? There are three reasons.
The first reason is that there is a “social benefit” which churches provide. Churches minister to the poor and needy in the community, provide numerous social services. The social benefit theory justifies tax exemption for churches as a kind of bargain — churches provide needed services, so they are entitled to tax exemption. Examples of these benefits are hospitals, food pantries, schools, and the like. Here in Latimer, St. Paul’s Lutheran church has, for over 90 years, provides a top-notch education through its parochial school.
The second reason is that the church provides “intangible benefits.” This is the real reason why the church is not like the Lions or similar organizations. The church preaches and teaches the Gospel to a sinful generation who needs it. The forgiveness of sins is offered every single week. Children and adults are educated in the fear of the Lord.
The third reason has to do with the first Amendment. As John Marshall, the 4th Chief Justice of the Supreme Court, said, “That the power to tax involves the power to destroy … [is] not to be denied.” The church’s taxation interferes with the 1st Amendment: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” Tax exemption protects religious liberty.
So, I’m going to close this with the words of Kentucky State Representative Whittaker, which were spoken during the debates on the Kentucky Constitution in 1890:
“Let an untaxed Gospel be preached, in an untaxed church-house, from an untaxed pulpit; let the emblem of a crucified, but risen Christ be administered from an untaxed altar, and, as the spire points heavenward, . . . let it stand forever untaxed.”