Top Pro & Con Arguments


Exempting churches from taxation is unconstitutional.

Tax exemptions for churches violate the separation of church and state enshrined in the Establishment Clause of the First Amendment of the U.S. Constitution. By providing a financial benefit to religious institutions, government is supporting religion. Associate Justice of the U.S. Supreme Court, William O. Douglas, in his May 4, 1970 dissenting opinion in Walz v. Tax Commission of the City of New York, stated: “If believers are entitled to public financial support, so are nonbelievers. A believer and nonbeliever under the present law are treated differently because of the articles of their faith… I conclude that this tax exemption is unconstitutional.” [24]

The Constitution bars government from subsidizing religion. However, providing a tax exemption to churches subsidizes religion. William H. Rehnquist, Chief Justice of the U.S. Supreme Court, declared in 1983 on behalf of a unanimous court in Regan v. Taxation with Representation: “Both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income.” [27]

Further, the tax exemption means churches receive special treatment from the IRS beyond what other nonprofits receive and such favoritism is unconstitutional. While secular charities are compelled to report their income and financial structure to the IRS using Form 990 (Return of Organization Exempt From Income Tax), churches are granted automatic exemption from federal income tax without having to file a tax return every year. Even some who support tax exemption believe that churches should have to participate in the same financial transparency as other nonprofits. Reverend Frank Benson Jones of Stop The Prosperity Preachers argues that requiring churches to file a 990 requirement is a good step toward discovering and eliminating financial abuse, “I am calling upon all Americans to insist on full financial disclosure by churches and religious organizations, and the first step towards full disclosure is to insist that churches and religious organizations file an IRS form 990.” [1] [72]

And, finally, the tax break given to churches restricts their freedom of speech because it deters religious leaders from speaking out for or against political candidates. Carl Gregg, pastor of Maryland’s Broadview Church, argues “when Christians speak, we shouldn’t have to worry about whether we are biting the hand that feeds us because we shouldn’t be fed from Caesar/Uncle Sam in the first place.” [1] [37]

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