Tax Exempt Status of Churches and Illegal Electioneering

It’s been a long time since I’ve written a blog post and there are a lot of ideas I have lined up. Unfortunately due to my chronic laziness I have a few that should have been posted last fall that still need to be posted. So hopefully I’ll be able to get productive and start posting again.

There were a lot of issues related to religion in politics that came up during the last election cycle. One of the most important of these issues is illegal electioneering done by churches and their tax-exempt status. In 1954, the Johnson Amendment was signed. It requires political neutrality from churches in order to maintain their tax-exempt status. Nonetheless, illegal electioneering by churches and pastors is commonplace. Here are three examples for this past election cycle:

1.     Senior pastor Terry Fox in Wichita, Kansas ran an ad in the Wichita Eagle stating that he would speak “about how the Obama administration and its socialist agenda is [sic] making the way for the Antichrist to take over the world.” He hosts a weekly radio show for his church and on it he said, “There’s no question in my mind that the sitting president we have today is far more evil and far more committed to a one-world government.” They openly endorsed Rick Santorum during the Republican Presidential Primary violating IRS rules. Their church publication, The Summit Informer, regularly includes illegal political campaign intervention. 

2.     Perhaps you saw this one in the news: a church in Leakey, Texas posted this on a sign outside their church, “Vote for the Mormon, not the Muslim! The capitalist, not the communist!”

3.     The San Diego Union-Tribune reported that Skyline Church Pastor Jim Garlow said at the end of his sermon, “Some came to hear my endorsement. My endorsement will be Jesus. I’ll tell you whom I’m going to vote for, but I don’t think that makes it an endorsement. I’m going to vote for Mitt Romney, but I’m not telling you to.”

Many would wrongfully point out that this is a free speech issue. This is not about free speech. This is about using tax money as a subsidy for partisan political activity.

In 1969, the Supreme Court ruled in Walz v. Tax Commission of the City of New York that religious tax exemptions did not violate the establishment clause of the 1^st amendment because they were granted to all religions. They justified their position because the do not transfer any revenue to the churches; they merely refrained from collecting taxes. However, this amounts to a government subsidy that all taxpayers contribute to, and only some utilize. This maintains a privilege given to some at the expense of others. The Supreme Court even said so itself in the 1983 ruling of Regan v. Taxation when it said that “both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system.” Once again, these are contradictory points of view from the US Supreme Court. On the one hand, religious tax exemptions do not violate the first amendment, but they can be thought of as a subsidy.

Here is a little background information: Churches get three main types of exemptions…income taxes, property taxes and taxes on donations (tithing).

The qualifications for a tax-exempt status are as follows:

1.     The organization must be organized and operate exclusively for religious, educational, scientific, or other charitable purposes (i.e. not political)

2.     Net earnings may not benefit any private individual or shareholder

3.     No substantial part of its activity may be attempting to influence legislation

4.     The organization may not intervene in political campaigns

5.     The organizations purposes and activities may not be illegal or violate fundamental public policy.

The overarching reasoning for this tax-exemption is that churches provide a public benefit. But what benefit does a church provide that couldn’t be fulfilled by some other nonreligious organization? Charity work can be done by anyone, you can learn about religion from any number of locations, and the advancement of religion itself is not a charitable act.

There are a number of negative consequences of the current system:

1.     Resources are being used by churches that could be used more effectively or more efficiently elsewhere

2.     Churches have an unfair business advantage with tax exemptions

3.     Taxpayers are responsible for the portion of taxes that churches are exempt from paying

4.     Churches are given preferential treatment

5.     Churches participate in political and lobbying activities with little or no sanctions brought against them (such as loss of tax exempt statues)

6.     Sanctions against churches have little or no effect due to the lack of regulations and oversight

This amounts to taxpayers indirectly supporting churches. I am forced to ask: “Why should my tax dollars go to support the subsidy of a religious organization that I am opposed to?” “Why should my taxes support the subsidy of the Mormon Church when they spent millions of dollars pushing proposition 8 in California.”

The fifth and sixth items on the list are very closely related and stem directly from the fourth. The prohibition of political and lobbying activity was the trade off made for churches to be tax exempt in the first place. In fact, the IRS makes it very clear that a churches failure to adhere will result in their tax-exempt status being revoked. The problem is the IRS’s inability or (more likely) unwillingness to adequately enforce this. Many churches break this rule, often overtly as in the examples above, and even feel that the rule infringes on their right to free speech. Many have even arrogantly claimed that restricting their ability to be involved in politics is a restriction on their religious freedom.

Religious organizations must understand that the tradeoff was made because religious political and lobbying activism poses a threat to the separation of church and state. But to some like Rick Perry, there is no such thing as the separation of church and state. He said as much when he claimed:

"This separation of church and state, which has been driven by the secularists to remove those people of faith from the public arena, there is nothing farther from the truth…When you think about our founding fathers, they created this country, our Constitution, the foundation of America upon Judeo-Christian values, biblical values and this narrative that has been going on, particularly since the ’60s, that somehow or another there’s this steel wall, this iron curtain or whatever you want to call it, between the church and people of faith and this separation of church and state is just false on its face…The idea that we should be sent to the sidelines, I would suggest to you, is very driven by those who are not truthful…Satan runs across the world with his doubt and with his untruths and what have you and one of the untruths out there is driven –  is that people of faith should not be involved in the public arena."

Perhaps the most disturbing aspect of this quote is that Satan drives those who push for separation of church and state, those that defend secular public space. It is inherently evil and must be combated. It’s warfare with truly cosmic and transcendent implications.

Thanks to a complete absence of sanctions or supervision, churches can, and do, freely abuse their tax-exempt status. This is an ongoing problem that in my opinion necessitates revoking all religious organization’s tax-exempt status. Last year, Italy decided to revoke their churches property tax exempt status. As a result, their tax revenue will dramatically increase. A study at the University of Tampa quantified the amount of US tax revenue lost at $71 billion. This is more than the federal government budgets for education (69.8 billion).

The Freedom From Religion Foundation is now suing the IRS to enforce its laws. Funny that you have to sue these days just to get people to do what they are supposed to be doing.