Facebook Memes and the Property Tax

November 27, 2012 | 39 comments
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There is, I’ve been told, a Facebook meme going around, juxtaposing a decaying house and the San Diego temple to support the argument that churches should not be exempt from taxation.

And, like Facebook memes everywhere, this one is dumb. Dumb primarily because the first two statements are tautological, and its punchline doesn’t follow. Because of course a tax-exempt organization does not pay taxes that a non-exempt individual pays. That’s pretty much the definition of tax exemption.

Of course, saying that a Facebook meme is dumb and tautological makes for a pretty short and boring post. Far more interesting, imho, is to take seriously the point that the people spreading the picture are trying to make, and complicating that rhetorical picture a little bit.

Isn’t It Unconstitutional to Tax Churches?

There is, of course, some argument about this, and I’m not a constitutional expert, but I’d say almost certainly not. Churches already pay taxes on their unrelated business taxable income, they pay the employer portion of employment taxes, and, if they lose their exemption, at least one court has found taxing them to be constitutionally permissible.

Why Are Churches Exempt, Anyway?

Great question. And a hard one to answer. The quick reason is, “public charities,” including churches, have been exempt from federal taxes since the beginning of the modern federal income tax. And the exemption may merely be a historical artifact. It may be because churches provide services that relieve the government of needing to provide those services, or it may be to allow taxpayers to directly control some portion of government expenditure. At least one commentator asserts that churches are co-sovereigns and, as such, cannot be taxed by the government.

So, Then, Why Do We Want to Eliminate the Exemption?

The first thing that the picture leaves out is the why. Why should we eliminate churches’ tax exemption? A couple reasons that I can think of:1

(1) Revenue needs. That a church is exempt from tax means that the government gets less revenue than it would otherwise get (or, possibly, it raises the same amount of revenue, but each non-exempt taxpayer has to pay incrementally more to make up for the lost revenue). For the most part, this is probably not a compelling reason to tax churches. As I’ve explained elsewhere, imposing income tax on churches is unlikely to raise any significant amount of revenue.2

(2) Fairness. This seems to be the implicit argument of the picture: it’s not fair that these poor people3 have to pay taxes while the rich churches avoid them.

The thing about that, though, is that we need to articulate a theory of fairness. In tax law, we generally divide fairness into horizontal equity and vertical equity.4 Horizontal equity says that similarly-situated taxpayers should be taxed similarly. So, for example, a family of 4 with $30,000 of income should pay roughly the same amount of taxes as another family of 4 with $29,000 of income. A corporation with revenues of $1 million should pay roughly the same amount in taxes as another corporation with $1 million. Horizontal equity clearly doesn’t apply here: I’m not sure what the appropriate similarly-situated taxpayer is for a church (clearly another church; perhaps a humanism society?). A family, however, is clearly not a relevant comparison.

Vertical equity says that taxpayers with more income should pay a higher percentage of that income in taxes. Again, though, I’m not sure that vertical equity concerns apply; even if churches were taxable, they wouldn’t be subject to the individual income tax rates; rather, they’d be taxed under the corporate tax, and the vertical equity concerns would apply viz-a-viz corporations.5

Is there another theory of fairness that would demand that churches pay taxes? I don’t know, but without it, a fairness argument kind of falls flat.

We’re Actually Talking Property Tax

But there’s kind of a conflation going on, too: the picture deals specifically with the property tax. And there its argument (such as it is) breaks down on a couple levels.

First, it is not altogether clear that the family on the left pays property tax, at least directly. Up to 70% of the the poor in the US rent, rather than own their homes. And renters don’t pay property taxes. Sure, they bear some portion of the property tax by virtue of paying more in rent than they would in a world without property tax. But they do not pay it directly, any more than a church that rents its space pays property tax (although the rent that church pays also includes some portion of the property tax that the non-exempt owner pays).

Moreover, the property tax is (mostly) separate from the federal income tax.

States could, it turns out, probably tax church property. In colonial times, states exempted their established church from state property tax, while taxing dissenting churches.6 Over time, for various reasons, they began to remove churches from their tax rolls. Today, most states don’t impose their property tax on the property of churches and other tax-exempt organizations.7

Most—though not all—states base their tax laws on the Internal Revenue Code, and then vary it in particular and idiosyncratic ways. Most of them that I’m familiar with at least reference 501(c)(3) status, but it may or may not mean anything. In Illinois, for example, a federal exemption letter is relevant to getting a state exemption, but not definitive.

Which is to say, even if you were to eliminate the federal income tax exemption of churches, you may or may not cause them to pay property tax. That’s a state-by-state consideration, which often is—and even more often could be—de-linked from the federal rules.

Constitutional Issues

Remember above where I said it’s probably constitutional to tax churches? Yeah, about that. See, churches have been exempt from federal taxation since at least the Revenue Act of 1894 (which was ruled unconstitutional, which ruling eventually paved the way for the 16th Amendment and the modern federal income tax). Starting from a blank slate, they almost certainly could have been taxed.

But we don’t have a blank slate. Which means that eliminating churches’ tax exemption today likely runs into constitutional problems.8 (And let me preface this with the fact that I’m basing my constitutional analysis on class I took almost a decade ago; feel free to update my Establishment Clause analysis in the comments.)

Basically, legislation that affects churches has to pass the Lemon test. Under this test, legislation affecting religion must (a) have a secular purpose, (b) not have a primary effect of advancing or inhibiting religion, and (c) not excessively entangle the government with religion. It seems to me that legislation that removes the tax exemption from churches fails this test; it’s hard to articulate a secular purpose (because it really doesn’t raise a ton of revenue) and it’s even harder to argue with a straight face that it does not have a primary effect of inhibiting religion.

That’s not to say that you couldn’t eliminate churches’ tax exemption. But you may not like the compromises it would require. Clearly, if Congress revoked section 501(c)(3) entirely, it should pass the Lemon test. But even if you are opposed to the exemption of churches, it’s not clear that revoking the exemption of hospitals, universities, museums, symphonies, the Red Cross, etc., is a price worth paying.

Alternatively, you could limit taxpayers’ deductions. Romney proposed limiting deductions to something in the $15,000-$20,000 range, while Obama has proposed capping deductions at 28%. As long as it was applied uniformly to donors to all tax-exempts, that probably passes the Lemon test, because it doesn’t single out religion.

I’ve been told that the Lemon test may not be as relevant today as it was when I was in law school. And it is not impossible that properly-designed legislation could do it. But I’d think that, at the very least, you’d want a compelling-ish reason to make the change. Given the minimal revenue it would likely raise, I think a legislature would be hard-pressed to come up with a reason beyond “We don’t like big rich churches” for making such a targeted change.

Conclusion (Such As It Is)

There’s a decent conversation to be had about tax exemption in general, and the exemption of churches in particular. But, given its complexity, reach, and constitutional issues, a two-photo panel is probably not the best way to hold that discussion. But, to the extent you enter the discussion (and, by all means, enter it!), it never hurts to define and to dig deep.

Show 8 footnotes

  1. And this is by no means an exhaustive list; I’m just trying to suggest some things that critics of the exemption should be thinking about
  2. Property tax, which the picture kind of technically is talking about, may be a different story, one I’ll get to in a minute.
  3. Which, I’ll note, I find the picture offensively classist: it seems to be shooting for a stereotypical poor-white-trash look, implicitly denigrating such people as somehow less than we are. That said, I’m a better tax critic than cultural critic, so I don’t want to harp on this too much, just register my disapproval of the picture.
  4. Neither of which is uncontroversial, but that’s beyond the scope of this post.
  5. Don’t hold me to that, though—I’m mostly thinking out loud here. Vertical equity between families and churches just doesn’t feel like a relevant fit, and I’m trying to think about why not.
  6. See Crimm & Winer, Politics, Taxes, and the Pulpit at 71.
  7. It could actually be all states; unfortunately, there are 50 of them, each with its own relatively complicated tax law. And state tax law is not my specialty, so I’m going to have to do this section in broad overview.
  8. It’s probably worth pointing out that, if state taxes are kind of outside my expertise, constitutional law is well outside of my expertise.

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39 Responses to Facebook Memes and the Property Tax

  1. Ethesis on November 27, 2012 at 8:35 am

    I thought the purpose of the meme was to enable self righteous thinking. I am afraid your analysis does not provide a substitute vehicle for the unchurched to feel self righteous vis a vis those who go to church.

    Though it is excellent analysis. ;)

  2. Kent Larsen on November 27, 2012 at 10:08 am

    Isn’t there something to be made of the fact that most church revenue comes from donations? Perhaps there is not any real difference economically between a donation and paying for a service (and I’m sure many economists would argue that donations ARE in fact paying for a service), but I think that culturally we do think that these are different things — so much so that uninformed individuals sometimes think that they can deduct donations to individuals when its done with charitable intent (e.g., little Jane needs a kidney, give money to her family).

    In the end the two-photo panel is equating the appearance of wealth with a lack of charitable intent or a lack of value to society. “Look at how much money churches spend on buildings instead of on people who really need it” the panel tries to say. And in that way of looking at value it ignores much beyond appearances and seems to reduce religion to a question of money and resources.

    IMO, we do well to beware any analysis that reduces an issue to only money or financial value.

  3. Jax on November 27, 2012 at 10:09 am

    I happen to have had a fairly lengthy conversation about this meme, and so I shared your link on Facebook and suggested it was a good analysis of the pic.

    I got a link in return telling me “this is why they should pay taxes” : http://www.abc4.com/content/news/top_stories/story/Apple-is-coming-to-the-City-Creek-Center/STIyjUuJxky2dNYgzNM6JA.cspx

    Not sure how/why that relates. City Creek Mall is owned by the church, but I’m not clear on why Apple moving into the mall means they should pay taxes… anybody have any ideas?

  4. Sam Brunson on November 27, 2012 at 10:25 am

    Jax, though I enjoy Apple stores as much as the next person (I pass a gorgeous one every day as I take my daughter to school), I’m puzzled as well. I wrote my take on the tax consequences raised by City Creek here, fwiw, and I’m pretty sure that 5 years of free rent for the Apple Store wouldn’t change that analysis.

  5. Roger on November 27, 2012 at 10:50 am

    I think the tax issue masks a much bigger issue. Michael Nielsen in an op-ed piece in the SLTrib wrote: “Were it up to me, the time, money, and other resources devoted to baptism [for the dead] would be focused more on the problems of the living. Too often we drive by the destitute on our way to do temple work.” I think the allocation of church monies, as this meme illustrates is a serious issue. Instead bragging about the number of new temples, we need to concentrate more on the earthly problems of the poor, both members and non-members. Very soon the majority of LDS Church members will be living in developing countries.

  6. Sam Brunson on November 27, 2012 at 10:53 am

    Roger, it’s not that I’m unconcerned about allocation of resources (though frankly, here in Chicago, at least, the Church spends a lot of resources both on the destitute and on the temple); it’s that this post is specifically about a tax issue, not about general Church resource allocation.

  7. Chadwick on November 27, 2012 at 11:23 am

    Hi Sam

    I’ve often actually been a bit surprised myself at how lenient the IRS is with churches, actually. So many laws are built on tax neutrality, for example ISO, where, because there is no income to the employee, there is likewise no deduction to the employer. But donations enjoy both the benefit of deduction on behalf of the giver while also enjoying tax exempt status on the receiver. I suppose this is true of all charities, not just churches, but I digress. Bottom lines I’m shocked at the IRS generosity here.

    With respect to the picture above, well, where to start? I mean, any one can throw together a nice visual to support a claim, but that doesn’t make it a valid claim. I have a cousin who writes for the New Era and one article on marriage started off with her saying she supports traditional marriage and gave an illustration of how wonderful it is by including a picture of how happy she was on her wedding day. I asked her once how the counter argument would look if I found a really nice picture of a gay couple that looked happy and beautiful on their wedding day. She seemed to think it wouldn’t have the same effect for some reason so I disengaged the conversation.

    When it comes to LDS buildings, I find we cannot win. I have had investigators not like our church because the building is too drab (cinder block walls, ugly dark brick, being reduced to holding priesthood in a basketball arena on a folding chair, etc). Then on the flip side we spare no expense on the temple and the discussion turns to starving children in China.

    I think the notion to tax the church started with the fallout of Prop 8. So many neighbors here in CA told me our church should lose its tax exempt status for encouraging our participation and nothing I could say otherwise was good enough. I think this is just a side effect of all that “tax the LDS church” talk. Good discussion on property tax nonetheless.

  8. Adam G. on November 27, 2012 at 11:57 am

    You could at least make a case that it would be unconstitutional to tax churches but not other non-profits.

  9. Sam Brunson on November 27, 2012 at 12:06 pm

    Adam, one could (and some, particularly politicians, have), but I think that claim is belied by the tax law as it currently applies, judicial decisions, and the historic treatment of churches. It is clearly constitutionally permissible to exempt churches from taxation, but you’d be fairly hard-pressed to show that it was constitutionally mandated.

  10. Mark B. on November 27, 2012 at 1:40 pm

    Someone from the UK should chime in with a discussion of the court decisions there that subject temples to property tax because they are not open as places of public worship. Here’s a link to a blog that discusses them briefly, and contains citations to the judicial decisions. http://www.lawandreligionuk.com/2012/07/27/charitable-status-public-benefit-and-closed-congregations/

    It also mentioned that the Church had appealed the decisions to the European Court of Human Rights in Strasbourg, which I hadn’t heard.

    In New York, property tax exemption is not assured simply because of 501(c)(3) status of the owning church. There is a separate test for charitable or religious use which must be met to be exempt from property tax.

    One constitutional problem that courts would encounter if they decided to start deciding tax-exemption-worthiness based on their judgment whether the activities of the church constituted “charity” would be that they’d have to decide whether the religious activities of a church were of any value whatever. Of course, I’d be happy to suggest that some other religion’s worship and teaching are utterly worthless, but I don’t want some court deciding the same about my church. : )

  11. Last Lemming on November 27, 2012 at 4:30 pm

    A couple of points:

    1. The Salt Lake County Assessor’s Office website shows the assessed value (or exemption status) of every parcel of land in the county. It shows all parcels on the block containing City Creek Center to be fully taxable. So let’s not get sidetracked on that.

    2. An argument for taxing the real property of churches (and other nonprofits) is that they receive public goods from the jurisdiction (and impose costs on it) and should pay their fair share for those benefits. Who paid for the roads that allow members to get to church or the temple? Who do we call when somebody breaks into the building? Who puts out the fires?

    3. As for the IRS being lenient (comment #7), I’m not sure what you are getting at. If you are suggesting that it is lenient because it allows churches to not pay income tax, you are mistaken. The IRS has no discretion in that matter–it would be up to Congress to make them taxable.

  12. Jax on November 27, 2012 at 6:12 pm

    The roads/firemen/police aren’t paid by Federal income tax, so the 501c(3) status shouldn’t affect that, right? I think that is what Mark in #10 was getting at, that the 501c(3) status doesn’t automatically qualify a charity from state taxes. Is that true for just property taxes, or is that true for state income taxes as well? Anyone?

    What would the effect on the church be with different state regulations on taxes? Would they decide to put a new temple just one side of a state border to avoid the taxes in the neighboring state that the temple is meant to serve? Hard to see that happening, but has it been a factor in temple location in the past? especially in foreign lands where it would be differeing country taxes?

  13. MLewis82 on November 27, 2012 at 6:28 pm

    You claim the issue for property tax breaks down because the family may not be paying property tax, most states mimic or reference the Federal rules in their tax codes and most states don’t make churches pay property tax, but that is not a refutation of the argument. This photo’s intent is probably to draw attention to the state laws themselves and not Federal income tax. The state laws could be in need of just as much or more reform as the Federal laws, and the fact the they mimic the Federal laws doesn’t give the states an excuse to not do their own governing. This is especially the case when talking about the poor as most poor people only pay state sales tax and property tax (albeit indirectly for 70% as you pointed out) and not Federal income tax.

    I think there is a good argument to make for making churches pay property taxes, which goes to a different kind of equity. All churches and non-profits benefit from roads, police, fire, and other public services without discrimination, same as every other member of society. If a church or non-profit can afford to own property, it should pay property tax, just like other poor otherwise tax-exempt members of the community (possibly that seemingly poor family in the photo). This is the real comparison that needs to be made. You say the poor family can’t afford to buy (70%), but there are still plenty of people who own property (30% by your figures) who are nonetheless poor. We don’t know how they got their property. It is possible they purchased a house in their younger years, and are poor now because they live off a pension–something that is easier if one doesn’t have a mortgage or rent to worry about (a position I would like to be in someday). Or maybe they inherited the house and don’t want to sell for sentimental reasons. Whatever the case, these 30% of the poor are the appropriate group we should be comparing the churches to.

    When our poor property owner finds they can no longer afford to pay their property taxes, most states will put a lien against the house until the taxes are paid. This lien can force them into bankruptcy and even foreclosure. Why should it be different for a church? Many churches acquire their property much in the same way the property owning poor acquired their property. It was purchased in earlier times of prosperity, or it was given to them–frequently in a will interestingly enough. If the poor find they can no longer pay property taxes, they lose the property, but the church is forever protected.

    Taking the argument a step further, if a church can’t afford to own property, it can rent and pay the taxes indirectly like most poor. This is how many churches operate, which means the status quo actually violates vertical equity, as “richer” churches (i.e. property-owning churches, though they may not actually be richer) pay no taxes while poorer churches (property-less churches) do pay taxes indirectly, though indirectly. It should also be noted that the indirect tax is often higher, as rental properties have a higher property tax rate in many jurisdictions than primary residences.

    If a church cannot afford to rent, then it will have to rely on the goodness of its members to provide subsidized rent or even free space within their homes, schools, or businesses for meetings. If the winter is not too cold, they could even meet outside (I spent many a cold snowy night outdoors for Ward Prayer when I was a student at BYU). If the church is so unloved that no one is willing to give them a place to meet, maybe we need to reconsider whether that particular church should even exist in the first place.

    My only fear in requiring churches to pay property tax is that they would be forced out of richer neighborhoods where real estate prices drive up property tax rates, but by that same logic, the poor are also forced out of those neighborhoods in time.

    Many of the Founding Fathers were against granting churches tax-exempt status (Madison in particular was known for this) partly because they feared church holdings would grow larger and larger removing valuable productive land from the tax rolls and the economy (as had been the case in Europe) and forcing people to rent from the churches (as is still the case in places like Germany). You have to remember, with a church, non-profit, or even for-profit, there is a potential, however unlikely it may seem, that this institution will be around for 100, 200, even 2,000 years. Unlike people, who have to use their resources productively or die (or at the very least get a lien on one’s property), a church can let land lie idle and unproductive for generations, long after the church’s relevance to the community has ceased. If however, it is required to pay the same property tax that the property-owning poor pay, then the church will have to fight for its survival like any other institution. If it fails to remain a relevant part of people’s lives, they will stop supporting it, and ultimately its property will be forfeit and set to more productive use.

  14. MLewis82 on November 27, 2012 at 7:03 pm

    I’m glad someone brought up the case in England against the Church. It’s usually pretty useful to get a comparative perspective on these sorts of things. I spoke with some law professionals at BYU’s International Law and Religion Symposium a few years ago, and learned a little bit of what the Church lobbies for in most countries.

    Obviously the first thing the Church fights for is the right to live our religion by actually holding meetings and talking about our religion among ourselves. This is allowable in almost every country in the world, including in most of the Islamic world and China.

    The next thing the Church wants is the right to tell non-members about our religion. This is a problem in the Islamic world and China, but by and large we are free, in principle, to go most places in the world and any legal problems come down to technical negotiations for missionary visas.

    After that the Church spends most of its efforts on the legal front negotiating the best possible tax situation for it and the members. It turns out, while many countries give some form of tax exemption or support to religions, America has long been an exception in giving tax deductions for donations to religious organizations. When I spoke with some of the delegates to this symposium, there was a lot of talk about a bill the Church had been lobbying for in New Zealand that would make religious donations tax deductible. The general consensus was that with most countries open to the gospel, tax issues and property rights seems to be where most of the legal effort of the Church is focused internationally.

    I don’t criticize the Church for its lobbying efforts both here and abroad. Tithing can be a real burden in some countries with progressively higher taxes, like Denmark or Belgium. With top tax rates close to 60% in these countries, plus other taxes such as property or sales not in the total figure, tithing could bring you close to losing 80% of your income. Of course 20% of the top earners income is still likely to be a substantial amount, so this is not likely to cause Church members to go bankrupt if they are careful about their finances, but it can still hurt. And of course the Church would like to save tithing money for its core projects and not on taxes, like any self-interested organization.

    But while there is a clear benefit to me to receive a tax deduction, I don’t really know that I agree with it in principle. Charitable donations should be made because I want to be charitable. I don’t know that we need the government encouraging me to be charitable or rewarding it, and to the extent that we do get tax deductions, I think it should only be for those donations that actually save the government money, like donating to a school, which lowers the amount the government has to pay for education. However, short of so radical a change that would eliminate most religious donation tax deductions, I would probably be willing to accept some sort of cap on total charitable donations for purposes of tax deductions.

    The other question that comes up with the 501(c)3 status is exemption from paying corporate income taxes. I don’t think churches or non-profits should have to pay that, but for that matter, I don’t think corporations should either. It just complicates matters for self-employed, and small businesses. Instead I think we should just tax the money that people actually take home. If companies didn’t pay corporate taxes directly, that money would have either been reinvested in the business (possibly by hiring more employees) or paid out in the form of dividends to the shareholders (at least for publicly traded companies). If we tax everyone’s income and taxed all income the same, (i.e. capital gains) then the lost revenue from no direct corporate tax should be made up, and we wouldn’t have to worry about whether or not an organization qualified for 501(c)3 status.

  15. MLewis82 on November 27, 2012 at 7:31 pm

    To Jax. It is true that every state does have different tax regimes, but every state also gives some form of religious exemption. What is also true is that some churches qualify for the exemption in some states and not others. Some lose their 501(c)3 status, but keep their state status, while others lose the state status but keep 501(c)3. We’re talking about churches, but this also applies to other charities like universities etc. Also, just as the tax regimes are varied, the benefits are also varied, from no property tax, to no income tax, even to no sales tax.

    I am unaware of the Church making a decision to build in one location over another purely for tax purposes. Usually it is an issue of cost or zoning. You’ll notice temples are frequently built in the suburbs, because a downtown location is just too expensive, but there are obvious exceptions.

    As far as choosing one country over another, France is about as hostile to religion as a country can get without outright banning it, which caused delays in the announcing of the Paris temple, and the Freiburg Germany temple was built before the Frankfurt Germany temple because communist East Germany was way more accommodating than democratic West Germany. None of these decisions had to do with taxes though.

    On a side note, I am aware of the Church initiating a legal proceeding to get its tax exempt status recognized for a parking lot in Yokohama, Japan. The city didn’t want to grant the exemption because it was separated from the church building by several hundred meters and it was in a high value neighborhood. Ultimately the Church won the exemption from property taxes in that case. Even if they had lost, I can’t see them locating outside Yokohama, at least not for a church building, just to avoid taxes though. Maybe if a temple parking lot had been at stake, as members need to travel farther to temples, so a larger parking lot would be more important, but even then, I don’t think it is a major consideration.

  16. Left Field on November 27, 2012 at 7:55 pm

    I wouldn’t have any idea if taxes have anything to do with it (more likely construction costs, I would guess), but the Ciudad Juarez Temple is just across the river from what I presume is a good chunk of the potential clientele in El Paso.

  17. Carole on November 27, 2012 at 9:53 pm

    Side note: The question of taxing churches to generate revenue is actually really interesting as it applies to local government finance in Utah. In Provo, for instance, something like 40 percent of all property in the City is tax exempt. Road maintenance in Provo has historically been funded primarily through property taxes, which raises some pretty good questions about equity since many tax exempt properties (including BYU, the Provo temple, the MTC, and hundreds of LDS meetinghouses) can generate a significant amount of local traffic.

    Lately, Provo city has been considering implementing a transportation utility fee in order to collect revenue more equitably from traffic-generating properties within the city. Since it’s a fee and not a tax, churches and non-profits would not be exempt (as long as the courts agree that it isn’t a tax, which they did in Colorado, but not in Idaho).

  18. Sam Brunson on November 27, 2012 at 10:25 pm

    Interesting, Carole; thanks. I know that Italy has recently (tried, at least) to tax churches under the same theory—that they own a significant portion of the land, which drains tax revenue generally.

    If 40% of its land is owned by tax-exempts, I suspect that Provo is an outlier (though it may be that other college towns also have a significant portion of their land owned by tax-exempts). I looked, and couldn’t find any data about the amount of land in the US or in San Diego held by tax-exempts. I do know (from the excellent Paradise Plundered) that, post-WWII, 40% of the land in San Diego was owned by the federal government, meaning that San Diego couldn’t tax it. And that really hurt San Diego.

    In communities with a broader mix, though, of residential, commercial, and business, query how much additional revenue would be raised by imposing property tax on tax-exempts. It may well be the right answer, of course, but the picture doesn’t raise any of the actual questions.

  19. PostScript on November 28, 2012 at 1:35 am

    Of course, LeftField (#16), the choice to build in Juarez instead of El Paso may have had less to do with finances and more to do with the fact that there are only two Stakes in El Paso, but four Stakes in Juarez, plus 4 other Stakes in that part of northern Chihuahua.

  20. Wendell on November 28, 2012 at 1:53 am

    I don’t see how you do away with the tax exemption for Church’s and not break the Establishment Clause’s supposed “wall of separation” between Church and State. It seems to me that if you allow the Government to tax the Church’s you must allow for direct politicking by the Church’s in a way not seen today. If you really want the Church’s money in the public coffers it seems they have purchased the right to be directly involved in the public square, not merely as individual citizens but as full-throat-ed unabashed political action committee’s if they so choose.

  21. kramer on November 28, 2012 at 5:41 am

    Actually, the people on the left probably don’t pay taxes. The 47% and all that.

  22. AndrewJDavis on November 28, 2012 at 6:01 am

    @ Sam (#18) “(though it may be that other college towns also have a significant portion of their land owned by tax-exempts)”

    As another anecdote, I grew up in Gainesville, FL, where the University of Florida owns a lot of land in the city and county. I was told that because the University didn’t pay property taxes, the county has an exceptionally high property tax rate to make up for what the University doesn’t pay. Of course, it’s only anecdotal evidence, as when I lived there, I let my dad worry about the taxes, and I just kept asking for (and never getting) a car…

  23. Mark B. on November 28, 2012 at 7:57 am

    Another non-tax factor that likely would have affected the decision to build a temple in Ciudad Juarez rather than El Paso–the difficulty Mexican citizens face in crossing the border into the U.S. compared to the relative ease for U.S. citizens entering Mexico.

  24. chris on November 28, 2012 at 12:26 pm

    One person says,
    “the time, money, and other resources devoted to baptism [for the dead] would be focused more on the problems of the living”

    To which a prophet has already said,
    “Why are so many willing to give so much in order to receive the blessings of the temple? Those who understand the eternal blessings which come from the temple know that no sacrifice is too great, no price too heavy, no struggle too difficult in order to receive those blessings. There are never too many miles to travel, too many obstacles to overcome, or too much discomfort to endure. They understand that the saving ordinances received in the temple that permit us to someday return to our Heavenly Father in an eternal family relationship and to be endowed with blessings and power from on high are worth every sacrifice and every effort.”

    I think it would be pretty easy to construct several uncharitable arguments that sanctimoniously drip with charity and try to demonstrate some costs -are- too great to go to the temple.

    But those arguments ultimately lack faith, and in the end we always come back to faith, and the testimony which rests upon it.

    If the church is what it says it is, temples are necessary for eternal salvation. Eternal salvation is apparently worth so much that we come into this world filled with every terrible thing imaginable for the hope of obtaining that salvation. Our church probably gives us the easiest out, because we could waive our hands around and say “it will all be made right in the millennium”. Except for the fact relying *solely* on that literal bit of deus ex machina obliterates the need for the gospel to begin with and we might as well resort to eat, drink, and be merry, for tomorrow we die and God will save us all in the resurrection. And not ironically, it is that final point, which the opponents of religion would be all to happy to confine religion to.

  25. Adam G. on November 28, 2012 at 12:50 pm

    Adam, one could (and some, particularly politicians, have), but I think that claim is belied by the tax law as it currently applies, judicial decisions, and the historic treatment of churches. It is clearly constitutionally permissible to exempt churches from taxation, but you’d be fairly hard-pressed to show that it was constitutionally mandated.

    Whatever may have been the case historically, modern First Amendment law has taken on a life of its own. There is at least a case to be made that taxes that apply to churches but not to other non-profits are a form of viewpoint discrimination. A lot would depend on the particulars of the tax in question and how its parameters were defined, but the argument doesn’t seem like an obvious loser to me.

  26. Sam Brunson on November 28, 2012 at 2:21 pm

    Adam, I say as much in the post: I think there’s a decent argument to be made that removing the tax exemption from churches, but not from other tax-exempts, is at least constitutionally suspect. But I don’t think there’s any basis for saying that the Constitution somehow prohibits taxing churches. That is, if Congress were to repeal section 501, entirely eliminating tax exemption, I don’t see the First Amendment saying that churches can’t be taxed.

    And that’s supported, I think, by the fact that churches currently pay UBIT and the employer share of payroll taxes, that if they don’t pay those payroll taxes they can be held liable for the taxes, penalties, and interest, and that if they violate the terms of 501(c)(3), they can lose their exemption, per a DC Circuit decision in 2000.

  27. Chris Kimball on November 28, 2012 at 9:33 pm

    In many places in the United States we take the separation of taxes from churches pretty far. A church may be exempt from federal income tax, state income tax, local property tax, state and local sales tax, opt out of the social security system and unemployment system, treat remuneration to an ordained minister as not subject to withholding, and exclude a parsonage allowance from income. And donations may be deductible for federal and state income tax purposes. For all that, on the assumption that donations would be treated as nontaxable gifts (at least in the U.S. income tax system), and that UBIT is fairly reported, I suspect the real money/cost/incremental effect is in the property tax first and deduction for donations second. I’d take up those two tax benefits long before debating the imposition of an income tax. Furthermore, those are areas where a broad change is fully debatable; property tax on all 501(c)(c) organizations and elimination of the charitable deduction are live topics.

  28. Brian on November 28, 2012 at 9:59 pm

    A friend who served in Frankfurt told me that missionaries there almost never meet investigator resistance to tithing because the government imposes a “church-tax” on the populace to support state recognized churches, so people are used to paying money to a church (although via the state). If my understanding of that situation is accurate, then this seems to be an even sweeter set up for churches than in the US of A. We don’t make churches pay taxes, they tax people to pay churches.

    On the one hand, it would be convenient if my tithing were automatically deducted from my paycheck like some taxes are, but if I was less active it would be annoying to be compelled to continue my financial support of an institution I didn’t participate (or possibly believe) in. Of course, the same could also be said of my tax dollars being used to subsidize Amtrak (which I believe in, but don’t often use).

  29. Ugly Mahana on November 28, 2012 at 10:10 pm

    I don’t believe in Amtrak.

  30. MLewis82 on November 29, 2012 at 1:50 am

    My understanding is the church tax in Germany, while the default position if your parents were registered as members of a church, is entirely optional. All you have to do is go down to the city hall and change your registration. None is an option, so you don’t have to pay any church tax, but social pressure does discourage a lot of people from stating in the public record that they have changed their religion. The LDS Church has qualified for the program under German law for several decades, so members could have the option of paying their tithing automatically, but the Church has traditionally declined the government’s offer, preferring for members to make a more affirmative decision to pay tithing. I heard the government also takes a small cut for processing the payment, so its actually extra revenue to the government, even if it does incidentally prove support to churches who struggle with getting members to pay. I’d be curious to know if the Church would pull in more from tithing even with the government’s processing fee, because less active members would still pay. I imagine you would only change your registration if you really disliked the Church, which is not the case with many less actives who nonetheless have a hard time paying tithing. This isn’t just a practice in Germany. Other countries in Europe also have the practice, but the Germans are the most famous for it.

  31. Last Lemming on November 29, 2012 at 10:28 am

    I’d be curious to know if the Church would pull in more from tithing even with the government’s processing fee, because less active members would still pay.

    Not likely. The church tax rate is, in most parts of Germany, 9 percent of your income tax liability–not your income. So the individual payments do not come close to a full tithe.

  32. Derek on November 29, 2012 at 11:05 am

    A property tax is a good thing, because it discourages being wasteful with land. If a church parking lot is mostly empty 6 days of the week, it shows poor stewardship of the Earth.

  33. Believe All Things on November 29, 2012 at 2:08 pm

    It seems that the central issue is the role of churches in modern society and whether they should be tax exempt. Concomitant with that is the societal trend towards secularization and religious intolerance. Given Sam’s excellent and more recent historical analysis, here’s a short article on Christianity Today titled Of Church, State and Taxes that delves into ancient history and how various rulers and governments treated this issue. Worth a read given the discussion here.

  34. Raymond Takashi Swenson on November 29, 2012 at 7:22 pm

    Contrary to the misconceptions of some people, a church is generally not a profit making enterprise that collects revenue in order to benefit particular owners. It is a common activity of many people in a community who pool their resources in order to gather together to worship God (or their idea of the divine), to fellowship with each other, and to perform work that is valued by the congregation as a community. The impact of taxes is not to reduce the profit of an owner or owners, but to place a burden on the positive work of the church. Though the church itself may not pay income taxes or property taxes, the people who participate in its activities do pay those taxes, both as mere residents of the larger community, and as owners of businesses. The revenue used by a church all comes from people who have already paid their fair share of taxes. Generally they contribute the the church according to their individual ability.

    My father was a letter carrier and a security guard, my mother a waitress. They never had a large income, but after having 5 kids they finally were able to buy their own house. They paid property taxes on it, of course, along with income taxes and other taxes. Asking the church they belonged to to pay additional taxes would mean asking THEM to pay a share of those taxes. It would not reduce their tax burden, but INCREASE their tax burden.

    The argument made in the advertisement contains a significant assumption, that somehow the government has an unlimited right to collect taxes from everyone in the community. What is the basis for that right? Because it can, because it has the power to condemn a person’s property and evict them and sell the house in order to collect the money in taxes? The basic problem faced by the poor homeowners is not the tax exemption given to churches, it is the unlimited right of tax collection by government.

    In most states I have lived in, people who live in homes they are buying are given a significant tax exemption. It is often called a “homestead” exemption. In the county outside Idaho Falls, it cut my property tax by over 30%. Now that I don’t live in that house, and could not sell it, I no longer get the exemption, and pay the full assessed tax. Is it inequitable for me to have to pay the full tax, while my former neighbors do not? I can assure you, I am not making a profit on the rental of my house.

    The ins and outs of various kinds of taxation make me skeptical of simplistic arguments about making taxes “fair”. My own observation is that the real purpose of the argument is to take more money from people who have earned it and give it to government, which has not earned it, and which feels little obligation to ensure that the benefits of government programs are distributed equitably. There needs to be SOME LIMIT to the ability of government to collect taxes under threat of civil confiscation and criminal punishment. Any system of tax collection is going to have aspects which can appear arbitrary, and give some people a perceived advantage, as well as invite people to game the system. I suggest the first response to anyone who claims that government should be able to take more money away from people and groups of people in the community is to justify why they need more revenue in the first place, and how it is supposed to benefit the community. Government does not deserve an assumption that it has a right to collect all taxes, all the time, from all people and all organizations.

  35. Sam Brunson on November 29, 2012 at 11:06 pm

    What is the basis for that right? Because it can, because it has the power to condemn a person’s property and evict them and sell the house in order to collect the money in taxes?

    Actually, it’s the Constitution, Article 1, Section 8 (at least with respect to federal taxes).

    Look, RTS, I get that you don’t like taxes, but, if your parents’ church paid taxes, it wouldn’t represent additional taxes on your parents any more than the fact that their grocery store pays property and income taxes. In fact, as I’ve discussed before, even if they were taxable, churches probably would not pay taxes on the donations they received.

    As for the limit on the ability to collect taxes, there are many, from political feasibility to, in several states, constitutional limits on the ability to increase taxes.

  36. MLewis82 on November 30, 2012 at 9:47 pm

    As someone who leans libertarian on most issues, I agree with Raymond Takashi Swenson that we are taxed too much and the government should be required to build a strong case anytime it wants to increase taxes, but that doesn’t mean the fairness argument shouldn’t apply. When doing any kind of analysis it’s important to apply the principle of ceteris paribus (a Latin term used in Economics meaning “all else being equal”). Though the idea of taxes churches as a way to increase revenue was touched on, when dealing with the fairness principle we actually have to start with the assumption that government revenue remains constant.

    Obviously property taxes are more complicated than this, but let’s take a hypothetical town with 100 acres of land, 90 of which are commercial or residential and all taxed at the same rate, 10 of which are owned by non-profits and not taxed. These will be primarily schools and churches, but throw Habitats for Humanity and the ACLU into the mix for good measure.

    If the government needs $100,000 of revenue, each taxable acre is taxed at $1,111. If all of the non-profits are subject to the same property tax, each taxable acre only gets taxed $1,000. This means a savings to people who have no connection to the non-profits of $111, but the cost of that savings now gets borne by the supporters of the non-profits, whether they are donors (like tithing) or purchases of services (like tuition at a school).

    From the perspective of Raymond’s parents, they pay less, because their tithing rate won’t change (it’s still 10%) and their personal property taxes will go down. Whether or not more of their money actually goes to taxes will depend on what percentage of their church’s revenue comes from their tithing. If his parents are poorer than the average, most likely less of their money may be going to taxes. If they are richer than the average church member, more will probably go to taxes.

    However, this does mean the churches will have less money to operate, which may cut into the programs, unless they can get their parishioners to increase their donations. This is because they (and all non-profits) operate with an indirect government subsidy, and changing the tax rules eliminates that subsidy. It is difficult to know how the LDS Church would change its operations. As most of the LDS churches outside of the western United States actually operate at a net loss, LDS church operations will probably not change substantially, as the Church will continue to subsidize operations in some parts of the world with money from others. Most likely the marginal effect would be that the building program slows down, and the Church may begin to ask for non-tithing donations to make up the difference.

  37. MLewis82 on November 30, 2012 at 9:55 pm

    My previous comments need to be qualified with the fact that the conclusions are only as good as the assumptions. The assumption is that the politicians are honest and will make changes in a revenue neutral way. I totally get that this assumption may not be the case, considering the difficulty most governments have in balancing their budgets. To keep politicians in check there is a good argument to be made that we should not budge on this issue as politicians would use the opportunity to increase revenue and government spending. But that is a different problem. The fairness argument deals with the fact that non-church goers are subsidizing the churches under the current system by providing free services like fire stations and road maintenance.

  38. Leann on December 8, 2012 at 12:21 pm

    I really think the purpose of the meme was less the tax issue, and more just plain anti-Mormon propaganda, because the tax issue is probably less relevant to the person posting it than the idea that he’s smearing the Church. If it WAS the tax issue, it could have been the Crystal Cathedral or St. Patrick’s Cathedral. It’s about as relevant as lottery ticket sales at Utah’s borders, which supposedly benefit those states as opposed to benefitting the state of Utah.

  39. Leann on December 8, 2012 at 12:31 pm

    A quick Google on this shows that the idea of it originated with definite anti- comments by Bill Maher about Mitt Romney’s charitable contributions to his “cult.”