Paul L. Caron
Dean




Wednesday, September 3, 2014

Believers Flee Pews as Germany Enforces 9% Church Tax on Capital Gains

Wall Street Journal, In Germany, Many Believers Balk at Tweak to Church Tax; As Loophole Closes, Disgruntled German Catholics and Protestants Opt to Officially Leave Churches:

Church TaxI
n Germany, being an official church member usually means paying an extra tax. But a change in the country's tax code is now causing many believers to leave the fold.

Germany is just one of a number of European countries where members of the main organized religions pay a special levy on income to provide the bulk of churches' finances. But when a loophole concerning income from capital gains closes next year, church leaders have good reason to expect an exodus.

So far this year, the number of Germans leaving the country's Protestant and Catholic churches has reached its highest level in 20 years, twice last year's level—a surge many clergy and finance experts blame on the changes in how the tax is levied.

The outflow is now fueling a debate about whether a levy that goes back to the 19th century is an appropriate way to finance churches in an increasingly secularized Germany.

 WSJ

Despite emptier pews across Europe, the church tax is a hallmark of the close financial bond that remains between church and state on many parts the Continent. As in Austria, Sweden, Denmark and elsewhere in Europe, the German government collects a special tax from registered believers on behalf of its biggest organized religions, which use the revenues to finance churches and pay clergy salaries. The taxes also help support affiliated hospitals and social services.

German church members must pay an additional 8% to 9% of their gross annual income tax and capital gains tax bills to the church. That is typically steeper than in many other parts of Europe. A registered believer, for instance, paying a 30% income tax rate, or €30,000, on an income of €100,000, would pay another €2,400 to €2,700 in church tax. ...

While the church tax had officially always been due on capital gains, it had never been properly enforced. Under the new rules, which the churches lobbied for, banks will be required to report their customers' religious affiliations, rather than wait for customers to volunteer the information. "We're not doing it for the additional revenue," said Thomas Begrich, finance chief for the Protestant Churches of Germany, or EKD, defending the change. "The wealthy need to pay their fair share."

https://taxprof.typepad.com/taxprof_blog/2014/09/believers-flee-pews-.html

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Comments

Quote: "We're not doing it for the additional revenue," said Thomas Begrich, finance chief for the Protestant Churches of Germany, or EKD, defending the change. "The wealthy need to pay their fair share."

He's certainly not going the get that revenue, fair share or not. Evading the tax is easy. The wealthy will simply leave one of the established denominations for either no church or one of the free churches.

The bad news is that this tax has been used to cover many social services. Much of that income is likely to disappear and some will suffer.

Of course, in the long run this is good. Charitable and religious giving should be voluntary not coerced. And too close a church/state tie hurts both.

Posted by: Michael W. Perry | Sep 3, 2014 1:55:49 PM