Why Are Churches Tax-Exempt?

By Jeremy Fejfar, April 15, 2012

Let me start by telling you about project Snow White. According to Wikipedia, this was the single largest infiltration of the United States government in history.
In the 1970s, up to 5,000 covert agents had infiltrated 136 government offices from the IRS and the DEA to the American Medical Association, in more than 30 countries. These agents collected intelligence, bugged meetings, destroyed government files and planted false information. The organization that was responsible for this operation was the Church of Scientology.

Many high-ranking members of the church served jail time for their roles, except L. Ron Hubbard, the founder of Scientology, who went into hiding for the remainder of his life.

In some countries, the Church of Scientology is not even considered a religion. In fact, a parliamentary report in France classified it as a dangerous cult. However, in 1993 the church gained tax-exempt status in the United States.

The First Amendment of the U.S. Constitution effectively created, in the words of Thomas Jefferson, a “wall of separation between church and state.” It seems to me that in order for the government to remain fair to all religions in the country, it must treat religious institutions generally the same as it would similar secular institutions; preference can be given to none because it is impossible to accommodate all equally.

The problem with granting tax-exempt status to religions and churches as a rule, is that now we have put the government in the role of determining what is a religion and what is not. Who’s to say that a gathering in someone’s living room every Sunday to discuss God is not a religious service?

Should this home be exempt from property taxes, as are thousands of churches, temples and mosques across this country? How many members does a group have to have to be considered a tax-exempt religion? More to the point, are these questions that we want our government asking?

William H. Rehnquist, former chief justice of the United States, said, “Both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income.”

For every house of worship that is exempt from property taxes, taxpayers have to pay more than they would have if a residence or business were on that same piece of land. Do churches not benefit from the same taxpayer-funded benefits that the rest of us enjoy — protection by the police and fire departments, maintenance of roads to and from their places of worship, etc? Why then should they be exempt from these taxes?

Additionally, the IRS allows a “parsonage exemption,” which provides preferential treatment to “ministers of the gospel” by allowing them to deduct from their taxable income housing allowances furnished as part of their compensation. Ministers may deduct everything from mortgage payments to furnishings and appliances. This exemption alone costs taxpayers $500 million annually.

The average salary for senior pastors with congregations of 2,000 or more is $147,000, with some exceeding $400,000.

Should churches that engage in philanthropic activities be allowed some tax-exempt status? Absolutely, but in exactly the same way that secular charities are granted that privilege. Whenever an institution relieves a burden that would otherwise fall on the government — such as providing shelter or food to the needy — that institution should receive tax benefits proportional to those services provided.

However, granting special privileges to religions that are not available to secular charities should end. Those that do receive tax exemptions also should have to open up their financial records to government scrutiny, no different than any secular organization, like the American Red Cross.

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