Paul L. Caron
Dean




Sunday, September 26, 2021

Amid Calls to #TaxTheChurches: What And How Much Do U.S. Religious Organizations Not Pay?

Chronicle of Higher Education, Amid Calls to #TaxTheChurches — What and How Much Do U.S. Religious Organizations Not Pay?:

#TaxTheChurchesThe hashtag #TaxTheChurches began trending on Twitter in mid-July.

The spark was allegations about the wealth of celebrity pastor Joel Osteen. But it wasn’t the first time that “tax the churches” has circulated. In fact it is slogan that long predates social media — Frank Zappa was singing it back in 1981, and Mark Twain expressed similar sentiments many decades before that.

As a sociologist of religion, I’ve long been interested in why religious institutions are exempt from certain taxes and what that means in potential lost revenue for the United States. In 2012, I examined this issue and estimated that in total, churches in the United States get out of paying around $71 billion in taxes annually. ...

[L]ocal and state governments forgo roughly $6.9 billion in tax revenue annually by exempting religions from paying property taxes.

This is just an estimate — it is nearly impossible to know the actual amount, and it may be that the true figure is even higher. If churches and other places of worship were required to file annual financial reports, researchers could use that information to evaluate the financial health of religious entities in the United States.

With such information more readily available, the public would find it much easier to discuss the merits of a hashtag campaign like #TaxTheChurches.

It would also give a clearer understanding as to how much, in Twain’s words, “the infidel and the atheist and the man without religion are taxed to make up the deficit in the public income” caused by the exemption for churches.

Tax Foundation, What If We Taxed Churches?:

“If churches paid taxes,” runs a popular claim on social media (hashtag #taxthechurches), “everyone would only have to pay 3 percent taxes.” Other claims put the forgone tax revenue haul at $76 billion or $85 billion, oddly specific figures conspicuously lacking a meaningful citation. Whether spurred by a belief that government is improperly favoring religious institutions, an antipathy to wealthy celebrity pastors, or a hope that taxing houses of worship could bring down personal tax bills, the taxation of religious bodies is hotly debated online, but barely on the radar of actual elected officials.

But is that true? How much, if any, tax revenue is forgone, and what do the policies look like? Excitable Twitter users may walk by faith and not by sight in this debate, but let’s take a step back from the rhetoric and see what’s true, what’s exaggerated, and what’s outright false about the tax treatment of churches and other houses of worship. ...

Conclusion
The notion that taxing churches would raise substantial federal revenue is wildly inaccurate, even neglecting the incoherence of imposing income taxes on a nonprofit organization. Clergy pay income and payroll taxes just like everyone else, and the local property tax exemption, while meaningful, is available to all nonprofits. The housing allowance, however, is somewhat meaningful and is controversial in legal circles. But on the whole, the notion that houses of worship are somehow depleting the treasury is what the Ten Commandments would call “false witness.”

https://taxprof.typepad.com/taxprof_blog/2021/09/amid-calls-to-taxthechurches-what-and-how-much-do-us-religious-organizations-not-pay.html

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