Thoughts on tax subsidies for religious organizations

No church property is taxed and so the infidel and the atheist and the man without religion are taxed to make up the deficit in the public income thus caused. -- ascribed to Mark Twain, but it's nonetheless true if someone else said it

Context

Although this topic is complicated and probably boring to most people, I believe it is far more important than most know. In my opinion, it is one of a few central aspects of potentially lethal political and social threats to secularism, American democracy, the rule of law, civil liberties and transparent, honest governance that I and some other people strongly believe is now dire and imminent. 

Included in this blog post are some points and counterpoints raised by informed, intelligent people about tax privileges for religion in the US. They are in disagreement about the nature and cost-benefits of the US government allowing the gift of unique tax privileges for religion worth tens of billion per year.  But they strike me as (1) much better informed than ~98% of the American people about this, including at least ~95% of the people and organizations that run this country, and (2) quite thoughtful and sincere.

In my opinion, public ignorance of this issue underpins public complacency and its inability to see the seriousness of the threat.

The church-tax break industrial complex is especially privileged, opaque, 

resists transparency and thus can be corrupt 

Point: Churches are the same as other non-profits, and they do not enjoy special privileges in their tax exempt status.

Counterpoint 1: Not true. Religious organizations have a number of important benefits that secular 501c(3)s do not. First, no application is required from a religious organization. The US government grants tax exempt status without application, and without any need to demonstrate that the exemption serves the purpose for which it was offered. Second, unlike secular 501c(3)s, religious orgs are not required to make their accounting public, ensuring that their operations are opaque. Third, it is extremely difficult for the government to audit them. A very high level official at the IRS must sign off on the audit - unlike all other non-profits. The result of this is that there have been but a handful of such audits in decades, and their ability to run opaque operations is matched by their ability to avoid any oversight.

Counterpoint 2: The opacity is central to the entire church tax break-industrial complex. By estimates in 2012 and 2013, tax breaks were worth ~$70-80 billion/year. Those estimates are likely significantly understated because complete information was impossible to obtain. Many religious groups refuse to disclose their finances for analysis. Not surprisingly, sometimes that opacity hides massive wealth, e.g., a secret ~$100 billion investment fund, that essentially no one knows anything about, including the US government. Gains on those investments are not taxed. The amount of the gains are unknown. The amount of crime that may be involved is apparently unknown, which makes sense. We only find out about crimes after a whistleblower files a whistleblower complaint in hopes of making a lot of money. 

The scope of religious tax breaks is broad

Religious organizations pay no sales tax. When representatives of a religious entity make a purchase such as office supplies, cars or travel, they are exempted from local sales taxes. They also pay no income taxes for businesses they own, if they can show that the business furthers the objectives of the religion. For example, a bookstore that sells religious books would be exempt. Clergy and members of religious orders are the only citizens who can opt out of paying Self-Employed Contributions Act taxes, which are 15.3% taxes on income for self-employed individuals that pay for Social Security and other federal benefits. If they opt out, they don't get social security benefits on retirement.

Religious organizations pay no property taxes, which are used primarily to fund local services such as firefighting, emergency medical services and police departments, schools and other infrastructure, all of which religious organizations use. One analysis indicated that the value of property one Florida county, Manatee county, asserted to be fairly typical for moderately populated US counties was $406.7 million. Property tax savings in that county amounted to $8.5 million annually, or about 1% of the county  budget. Extrapolated nationally, that benefit would amount to about $6.9 billion/year.

Tax breaks and religious freedom

Point: Denying religious organizations tax exempt status unfairly or illegally singles out religious churches and groups specifically and punishes them by denying them the same opportunities offered everyone else.

Counterpoint: Not true. Any religious organization is free to create a subsidiary non-profit, whose tax exempt status would then be the same as for any other. There is no reason a homeless shelter or kitchen for the undernourished couldn't be run by a church as a non-profit, but it could not be run as a church. Many businesses run subsidiary non-profits, like the Coca Cola Foundation.

The foregoing only hints at the complexity of the religious tax subsidy issue. Other serious aspects of this include fights over constitutional interpretation, fights over Free Speech and fights over the Establishment clause. The powerful Christian nationalism political movement is highly focused on advancing legal arguments to expand its reach into the US treasury. It has been refining and advancing those arguments for years with slowly increasing success in recent years as the number of radical Christian nationalist federal judges increase in dominance. With each expansion of access to tax dollars the federal courts grant, the Christian nationalist movement's power and influence increases and so does the intensity of the attack on democracy, the rule of law, civil liberties, secularism, and honest governance.