How much does the U.S. government forgo annually by not taxing religious institutions? According to a report by University of Tampa Professor Ryan T. Cragun and his students Stephanie Yearger and Desmond Vega, the government loses $71.1 billion annually.
The professor and his students examined U.S. tax laws to estimate the total cost of tax exemptions for religious institutions. The article presenting their findings appears on the website of Council for Secular Humanism, an organization of non theists.
The article begins with reference to a photo showing the $1.75 million mansion of the Reverend Randy White, the former head pastor of Without Walls International Church in Tampa, Florida. The writers say: "While some people may be bothered by the fact that there are pastors who live in multimillion dollar homes, this is old news to most. But here is what should bother you about these expensive homes: You are helping to pay for them! You pay for them indirectly, the same way local, state, and federal governments in the United States subsidize religion—to the tune of about $71 billion every year."
According to tax authorities, tax law exempts religious groups and other nonprofit organizations because of their charitable nature. But this assumption has been called to question several times with reference to extensive business and financial interests of many religious organizations.
The findings of the professor and his students have raised questions among non theists who have for long been involved in efforts to end the tax-exempt status of religious organizations and groups on the grounds that it is unfair.
AP reports that Tom Flynn of the Council for Secular Humanism, said: "The issue of religious tax preferment is especially relevant now because the number of Americans living outside any religious tradition continues to grow. That underscores the unfairness of taxing all Americans to subsidize religious institutions that only some Americans utilize."
Daily Kos expresses the concern about tax-exempt status of churches from the perspective of their increasing involvement in politics as "something which used to be viewed as semi-prohibited in exchange for their exemption from taxation... They are too politically powerful for any politician to dare challenge... James Dobson’s Focus on the Family passed more legislation in the Arizona legislature last year than any other interest group."
Cathedral of the Immaculate Conception, Albany, NY: Thinking about death nearing could generate religious beliefs as people age, University of Chicago researchers speculated. But could spritualty deepen from more years of pondering life's mysteries?
AP reports that Mark Rienze, senior counsel at the Becket Fund for Religious Liberty disagrees with Flynn. He argues that Americans have made a democratic decision that religious institutions are benefit to society, believers and atheists alike. He said: "Whether it is the Quakers opposing slavery, Reverend King arguing for equality, or a Catholic soup kitchen feeding and sheltering all in need, our history is full of examples confirming the great public benefit of our religious diversity."
AP notes there have been several attempts in the past to quantify the cost of religious tax exemptions but only few actual legal challenges.
Flynn said: "It is something lots of people have been against, but not very much has been done about it. Coming up with hard numbers has been so difficult. But if there are going to be good discussions about this, we need good data."
AP mentions a few non theist challenges to tax-exempt status of religious organizations: In 1969, the Supreme Court ruled in Walz v. Tax Commission of the City of New York that tax exemptions for religious organizations do not violate the Constitution's Establishment Clause because they do not favor one religion over another. But in 1998, the Supreme Court rejected a Texas state sales tax that exempted religious publications.
AP reports that Freedom From Religion Foundation (FFRF), an organization of secularists, have twice challenged the parsonage allowance. The group also supported a 1996 Colorado ballot initiative to repeal tax exemptions for nonprofit organizations including religious organizations. But the initiative was defeated by a margin of 60 percent.
In assessing the public cost of the tax-exempt status of religious organizations, Cragun and his co-authors delved into federal tax exemption laws. They also looked at some state and local laws, especially in their home state of Florida and concluded:
States bypass an estimated $26.2 billion per year by not requiring religious institutions to pay property taxes.
Capital gains tax exemptions for religious institutions may be as much as $41 million a year.
U.S. clergy may claim as much as $1.2 billion in tax exemptions annually via the parsonage allowance.
The west rose window was dedicated in 1977 in the presence of Queen Elizabeth II and President Jimmy Carter.
The authors, however, said they were not calling for a complete end to the tax-exempt status of religious organizations. They said what they advocate is an exemption only for nonprofit organizations, both religious and secular, who supply services government would have to supply if those organizations fold up.
Cragun comments: "It makes little sense for a group like the Red Cross to pay taxes because what they are doing is truly a benefit to all society. But if we took religious organizations away, would the government say 'We really need religious-based charity, so we are going to step in.' I don't think they would."
The authors then ask: "Do religions engage in charitable work that addresses the physical needs of the poor? Many do, but that is not their primary focus."
According to the authors, "Religions are quick to trumpet when they do charitable work. But they don’t do as much charitable work as a lot of people think, and they spend a relatively small percentage of their overall revenue on such work. For instance, the Church of Jesus Christ of Latter-day Saints (the LDS or Mormon Church), which regularly trumpets its charitable donations, gave about $1 billion to charitable causes between 1985 and 2008. That may seem like a lot until you divide it by the twenty-three-year time span and realize this church is donating only about 0.7 percent of its annual income."
Ceiling of the Washington National Cathedral.
The authors concluded, saying: "...as the perceived 'benefit' (spiritual) to society of religions becomes increasingly irrelevant as more and more Americans cease to utilize their 'services' by disaffiliating, it will also be increasingly unfair for a large percentage of nonreligious Americans (almost 40 percent in some states) to subsidize the recreational activities of others. These subsidies should be phased out."
But the authors acknowledge that this is "unlikely to happen." Instead they suggest, tongue-in-cheek, alternatives that counter the claims of churches to tax exemption: "...write off our annual entertainment expenses as 'donations'; the subsidizing of all of our housing expenses, including utilities and maintenance costs; being exempt from paying taxes on businesses we start related to our primary purpose in life (say, a micro-brewery); direct cash transfers to us from the government for trying to convert people to our worldviews while claiming to provide social services; and, most important, the right to host games of bingo without reporting our income as gambling revenue!"
Analysts say that one of the challenges authorities will face in assessing religious organizations for tax is determining "who owns what." Many religious organizations hold assets under various names. According to AP, an author of a study that attempted to list Catholic Church property in Philadelphia, said:"I had to stop at 129 names under which the church had holdings."
Patheos comments that given the current political atmosphere, it is unlikely that challenges to the tax-exempt status of churches will be successful. Patheos comments: "Religious groups have far too much power in Washington and they’re not about to ask the government to remove their special privileges. But we can keep the pressure on."