Should Churches Be Tax Exempt
Karen Kerr, the president of Edmonton Atheists and co-founder of Alberta Secular Conference says no.
In Canada many charities and other non-profits, including churches and religious groups, are tax-exempt if they are deemed to create public benefit. The exemption is premised on the idea that they provide a public good. However, churches differ from non-profit charities in some important ways.
Charitable non-profit groups include food banks, the SPCA, hostels, homeless shelters and the Salvation Army. The main difference between these groups and religious places of worship are the rules the non-profits must follow, which include the building being unrestricted at least 70 per cent of operating time and adherence to rules against discrimination . While charities must focus on charitable acts, religious groups can focus on the needs of their congregations first, with the charity coming second. Even if religious groups totally ignore the stipulations about public access and non-discrimination, they are often assumed to be contributing to the community.
We need to start asking: Should all churches/religious buildings automatically be given tax exemptions, or should they first meet the same requirements as other non-profits?
Rev. Markus Wilhelm, the pastor at Sherwood Parks Glory Lutheran Church and Chester Ronning Centre adviser says yes.
Karen Kerr responds to Markus Wilhelm
Simply put: Religion does not have a monopoly on altruism.
responds to Karen Kerr
Church Property Tax Exemption
Under the state constitution, property that is used solely and exclusively for religious worship is exempt from property tax, unless otherwise provided by general law. By statute, the property must be owned and used solely and exclusively for religious purposes to qualify for the exemption. The bill eliminates the ownership requirement, which is not expressly included in the state constitution, so that a property leased to a church or other organization that uses it solely and exclusively for religious purposes is exempt from property tax.
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Refer Senate Bill 18-070 to the Committee on Finance. The motion failed on a vote of 3-4. Postpone Senate Bill 18-070 indefinitely using a reversal of the previous roll call. There was no objection to the use of the reverse roll call, therefore, the bill was postponed indefinitely. The motion passed on a vote of 4-3. -
Vote Documents This is a conceptual amendment to use a different amount for the approps clause from the revised fiscal note. The motion passed without objection. Refer Senate Bill 18-070, as amended, to the Committee of the Whole. The motion passed on a vote of 4-3. -
Refer Senate Bill 18-070 to the Committee on Appropriations. The motion passed on a vote of 3-2.
Improper Identification Of Illegal Churches:
Some people presented the idea that taxation on churches is vital and there should be a change in the legislature to bring churches under the tax laws. This was not possible due to religious factors and so another idea was presented. This idea enforced the US government to hand pick or identify only those churches which are violating laws of the state or are involved in unlawful activities such as political support.
These chosen churches would tax and the other ones were exempted from paying taxes.
It is not as simple as it seems as it is not possible for the government to investigate every church and identify some as legitimate and some as unlawful. As a result, the government decided to make all churches tax-free irrespective of the fact that they were lawful or unlawful.
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An Issue Of Double Taxation If Churches Pay Taxes:
Let us look into this issue of double taxation that applies to churches. The churches need some source of income so that they could carry out their daily expenses such as the electricity bill or funds to pay the staff of the church. The government does not provide churches with incentives to pay for such spending, so how do they run? Churches are run the people and other private organizations. These locals and private organizations donate some of their money to the churches.
Private organizations and locals earning by working or having some sort of income for their personal needs. As a result, these organizations and the local public who donate to the churches have to pay taxes. The amount they give to the churches is taxed, which means taxes are given to the government before the organization or the locals fulfill their taxes.
The taxed donations paid to the churches cannot tax again. Therefore, this double taxation issue does not allow the government to force the churches to pay taxes. Members of the church pay their income tax, and these members also donate to churches.
Slipping Through The Cracks
To qualify for a 100 percent tax break, a clergy residence must clear only a handful of legal tests. It needs to be owned by the religious organization, cant generate any income and be considered reasonably necessary for use as a residence. It also must be occupied by a member of the clergy though the term is left largely undefined. Appraisers said most of the definitions are so vague they are of little use in vetting applications.
This multi-generational home features decorative stone accents, wood beam ceilings, Plantation shutters, built-ins, 3 living spaces & abundant storage, boasted the2018 listing for the 6-bedroom, 6.5-bath home in Spring appraised at $1.3 million. In addition to the 6,800 square feet of living space, the pristine landscaped yard has cvrd patio & sparkling pool-perfect for family gatherings.
Sitting on 1.1 acres, it shouldnt qualify for the parsonage tax break. But in 2018, Montgomery County appraisers granted it anyway to Houston Grace Church one of at least four tax-free clergy residences in the county that exceeded the acreage limit. Together, the homes cost local taxpayers more than $50,000 a year in foregone tax payments. The church did not reply to messages.
McLennan County had two parsonages exceeding the 1-acre statutory limit. Bobbitt, who became chief appraiser last year, explained that the applications often received only cursory scrutiny.
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The Vision Of The Golden Rule Would Eventually Die
Furthermore, these churches are not run or finance the government. They are run donations from the locals. So the people who give taxes to the government also take out some extra dollars from their income to pay as donations to the church even though the people who do not go to the church are taxed the same as churchgoers. Therefore instead of applying taxes on churches, the government of the United States of America should focus more on pulling out donations from people who dont visit the church to equalize the ratio of payments given by churchgoers and non-churchgoers.
With taxes applied on churches, the smaller churches operating in smaller areas will eventually shut down. It is because such churches are overburden taxes and would shut down. Moreover, due to the smaller population, they will not bear their daily expenses due to smaller donations. The united states have a lot of smaller churches. If all those churches would shut down, the vision of the golden rule would eventually die and will not be followed anymore. Those teaching would reduce with the number of churches shutting down. Moreover, if the golden rule teachings are not followed, it will lead to more crime and less freedom.
Taxing Churches Would Lead To Taxing Of Other Nonprofit Organizations:
Before deciding to tax churches, the government has to consider other non-profit organizations too. Other nonprofit organizations such as women shelters, orphanage shelters, and schools would also have to be taxed. This would lead to a great tax collection but also would lead to the shutting down of many non-profit organizations. As a result, churches do not pay taxes to prevent other organizations from shutting down.
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What Are The Alternatives
The exclusivity requirement of church exclusion often makes this impractical for churches that want to use their property for non-religious purposes. California law provides other ways for churches to apply for property tax exemptions, which may be preferable:
- Religious tax exemptions apply to churches that own property, run services, or operate schools. Compared with church exemptions, this exemption has several advantages, including a one-time registration requirement.
- Welfare immunity is another option for the church to use its property for religious purposes only. Social security benefits can be applied to a wider range of assets than church benefits, including for charitable purposes.
Some Daycares In ‘a Very Precarious Place’
‘”The irony, in a way, is for years and years a lot of these daycares, including ours, have worked on grants from the government to work that into the budget,” he said.
“So it’s kind of like the left hand, right hand, you know, giving and taking and putting some daycares into a very precarious place.”
Warner, in his decision, wrote that he doesn’t believe that every activity carried out by a religious congregation is exclusively for a religious, or congregational, purpose.
“If a congregation, based on its evangelical or humanitarian beliefs and a recognition of needs in the community, were to construct and operate a seniors’ residence, a retail thrift or discount store, or a bakery, other than for the primary benefit of its own congregation, and in competition with similar non-religious operations, it is not conducted exclusively for religious or congregational purposes,” he wrote.
Several United churches in the Halifax area said they are in a similar situation, as they look at annual tax bills in excess of $4,000.
Andrew Sowerby, the lawyer for the New Minas Baptist church, said he expected Property Services Valuation Corporation to start pursuing revenue from other churches following the loss of their case.
Sowerby said daycares and churches will have limited options, such as rolling the costs into their expenses or passing the cost on to parents.
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Statutory Exemptions For Places Of Worship
Under each Act, places of public worship receive a statutory exemption.
Section 396 of the Vancouver Charter says exempts Real property
And churches
of which a religious organization, either directly or through trustees therefor, is the registered owner, or owner under agreement, and which is set apart and in use for the public worship of God provided, however, that the exemption by this clause conferred shall not be lost by reason of the use of the church property for any of the purposes hereinafter set out if it is so provided by by-law:
The use of the church property by a government, notwithstanding that a fee is paid for such use:The use of the church property for the care or instruction of children under school age by a charitable or non-profit organization:The use of the church property for the purpose of teaching organ or choral music, notwithstanding that a fee is charged therefor:The use of the church property for the holding of organ recitals, notwithstanding that the recitalist receives a fee therefor:
Section 229 of the Community Charter exempts
a building set apart for public worship, and the land on which the building stands, if title to the land is registered in the name of the religious organization using the building, trustees for the use of that organization, or a religious organization granting a lease of the building and land to be used solely for public worship
Churches Have Options For Appeal
Churches can also appeal their assessments to the Nova Scotia Utility and Review Board or challenge it in court, he said.
He said they can also have their tax assessment reviewed by their local council, as Cormier did.
“As these assessments are going out to these various religious institutions that may have had many years of being subject to no property tax, I expect they’re considering their options,” said Sowerby.
Shannon Peterson, a spokesperson for the Property Valuation Services Corporation, said last year’s Supreme Court decision led them to inspect and reclassify the other churches.
“If we determine the business is operating for a commercial purpose, we will assign a commercial taxable classification to the portion of the property used for commercial purposes,” said Peterson. “The remainder of the church property will retain its exempt classification.”
Property assessments were done by the province until they were privatized a decade ago.
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Churches Have Become Businesses
Let me repeat that again. Churches are not non-profits, nor are they charities. Churches in the United States are businesses. They function like a business. They make money like a business. Not taxing them like a business is giving them preferential treatment because they are a religious business
To illustrate this point, lets look at a churches budget.2
- 58% of the budget goes to personnel expenses. Thats over half, simply to pay people working at the church.
- 18% goes to the building.
- 6% is spent on office supplies
- 3% is spent on misc things.
- 14% is spent on programs.
Lets take a closer look at that last one, cause it seems like a good number. Churches are tax-exempt because they provide services to the community, right? How much are they spending? On average, 3%. Only 3% of a churchs budget is used to help the community. And 2% of that is international. Churches are exempt from paying taxes because 1% of their income is used to help the local/national community. If I use 1% of my income for that, can I be tax exempt as well?
Why Churches Are The Gold Standard Of Tax
It is not a silly question to ask whether churches should be tax exempt. The Washington Post is debating it, and maybe the rest of us should too. As one professor put it, churches are more private club than public good, so why do they need tax exemptions? On the other hand, some defend the current tax exemption by saying that tax exemptions protect religious freedom so we should keep them.
Even with all the talk of tax reform this election season, the question of whether we should tax churches is sensitive. It invites questions about the separation of church and state. Perhaps we can learn from Zimbabwe, where the question is it fair to tax churches is at least being asked. Of course, Zimbabwes tax system isnt exactly a model of fairness or competitiveness, but then neither is ours. Its wasnt long ago that our U.S. tax system tanked 94th out of 100, right below Zimbabwe. For now, Zimbabwes tax agency explains the tax issues for churches and religious organizations.
Church of Scientology community center in Los Angeles, California.
In the U.S., for generations, churches have been exempt from income taxes. Whats more, all 50 states and the District of Columbia give them a pass on property taxes too. Ever since our founding fathers, its hands-off for federal income taxes, property taxes and more. In that sense, reexamining the tax exemption afforded churches might be liberating.
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Article 3 Assessments Generally
§11-3-9. Property exempt from taxation.
All property, real and personal, described in this subsection, and to the extent limited by this section, is exempt from taxation:
Property belonging to the United States, other than property permitted by the United States to be taxed under state law
Property belonging exclusively to the state
Property belonging exclusively to any county, district, city, village or town in this state and used for public purposes
Property located in this state belonging to any city, town, village, county or any other political subdivision of another state and used for public purposes
Property used exclusively for divine worship
Parsonages and the household goods and furniture pertaining thereto
Mortgages, bonds and other evidence of indebtedness in the hands of bona fide owners and holders hereafter issued and sold by churches and religious societies for the purposes of securing money to be used in the erection of church buildings used exclusively for divine worship or for the purpose of paying indebtedness thereon
Cemeteries
Property belonging to, or held in trust for, colleges, seminaries, academies and free schools, if used for educational, literary or scientific purposes, including books, apparatus, annuities and furniture
Public and family libraries
Property used for charitable purposes and not held or leased out for profit
All property belonging to benevolent associations not conducted for private profit
Bank deposits and money
Property Tax Exemption For Organizations Primarily Engaged In Charitable Activities
Property tax in Texas is a locally assessed and locally administered tax. There is no state property tax.
An organization engaged primarily in charitable activities may be eligible for a local property tax exemption.
Additionally, a corporation may be eligible for a local property tax exemption if it
- is exempt from federal income tax under Section 501 of the Internal Revenue Code
- holds title to property for a qualified charitable organization
- collects income from the property for a qualified charitable organization and
- turns over the entire amount of income, less expenses, to a qualified charitable organization.
The organization for which the 501 corporation holds title to property must meet certain requirements and be a qualified charitable organization that would qualify for exemption from taxation, if it owned the property.
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Problems With Tax Exemptions
Nevertheless, none of that changes the fact that property tax exemptions are a problem. Not only are citizens forced to indirectly support religious organizations, but some groups benefit much more than others, resulting in problematic religious favoritism. Some institutions, like the Catholics and Christians, have billions of dollars in property whereas others, like the Jehovahs Witnesses, own much, much less.
There is also the problem of fraud. Some people tired of high property taxes will send away for mail-order divinity diplomas and claim that, because they are now ministers, their personal property is exempt from taxes. The problem got to be enough that in 1981, New York State passed a law declaring mail-order religious exemptions to be illegal.
Even some religious leaders agree that the property tax exemptions are problematic. Eugene Carson Blake, a former head of the National Council of Churches, complained once that tax exemptions ended up putting a greater tax burden on the poor who could least afford it. He feared that one day the people might turn against their wealthy churches and demand restitution.
The idea that wealthy churches have abandoned their true mission also bothered James Pike, a former Episcopal bishop in San Francisco. According to him, some churches have become much too involved with money and other worldly matters, blinding them to the spiritual calling which should be their focus.
