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Should churches pay taxes?

By Scott Tibbs, June 24, 2009

A frequent complaint of some on the Left is that churches do not pay property taxes, and are therefore getting a "subsidy" from the government. They argue that churches should pay their "fair share" rather than getting "special" treatment. Should churches pay property taxes, or should we maintain the status quo?

I would argue that subjecting churches to property taxes is a bad idea. The excesses of some Christian merchants aside, Churches are not profit-making entities. Many smaller churches struggle to make monthly expenses like salary and mortgage. Subjecting churches to property taxes would be a major burden on many smaller churches already struggling to get by and would therefore be a restriction on religious freedom. It is important to note that (generally speaking) the larger a church is, the more likely it is to either compromise on or be in rebellion against Biblical doctrine.

In addition, it is important to note that in Indiana, local government is on what is called a "frozen levy." Basically, a unit of government (such as a city, county or township) can collect X dollars per year and the tax rate is computed based on assessed evaluation to get the total budget. Adding churches to the property tax rolls will not increase the money to local government at all. Property taxpayers would see a small reduction in property tax bills, which most likely would not be noticeable at all.

Churches, like private charities, are generally classified as 501(c)3 not-for-profit organizations. Also like private charities, churches also benefit society through collections for the poor and so forth. Churches are one of the major sources of contributions for charities such as Backstreet Missions (which operates a homeless shelter) and the local Crisis Pregnancy Center, which operates the Hannah House to give women and their infants a place to stay in addition to providing things like diapers and formula.

If churches are top be added to property tax rolls, the only way to be fair is to tax charitable organizations such as Middle Way House and the Salvation Army rather than picking and choosing which nonprofits pay taxes and which do not. In Monroe County, a huge swath of land that is exempt from property taxes is owned by Indiana University. If the university paid property taxes, that would have a significant impact on property tax bills.

Some have complained that it is "unconstitutional" to exempt churches (or mosques, synagogues, temples, and so forth) from taxation. It isn't. So long as government does not show favoritism by picking and choosing which religions (or denominations) to exempt and which to tax, there is no "respecting an establishment of religion" and therefore no Constitutional problem.

What would be unconstitutional is for government to decide which churches can be exempt from property taxes based on the doctrinal commitments of the church. A former member of the Bloomington City Council said the following on Monday:

Grants and property tax exemptions are granted but they should not be granted to organizations that don't meet community standards as expressed in their anti discrimination ordinances and property tax exemptions should not be granted universally to that class.

Of course, the city of Bloomington's anti-discrimination ordinance includes protections for "gender identity" and homosexuality. Under this proposal, churches that submit to Biblical teaching that sodomy is sinful would not be exempt from property taxes, but churches that bow to the city's embrace of Political Correctness would not be taxed. Churches that do not allow women to be pastors and elders would also be subject to taxation.

This kind of doctrine-based discrimination is clearly and plainly unconstitutional. I'm disappointed (but not surprised) that a former member of the city council would be advocating this discrimination. Either all churches should be exempt from property taxes or none should be, and the government cannot pick and choose based on the personal views of elected officials, or what elected officials decide is politically expedient at the moment.

Finally, despite the claims of some, exempting churches from taxation is not the same as a subsidy. If I do not take $10 from your wallet, I am not "giving" you $10 - I am letting you keep what is yours. (Or in the case of churches, what was donated.) If I hand you a $10 bill and you place it in your wallet, that is a subsidy. Church members are already taxes, both on income and property so there is no need to tax the money twice. (Those who rent, of couse, pay property taxes indirectly.)

I am completely opposed to churches (or parachurch organizations such as Christian schools) taking any money from government. With government money comes government strings, and it is foolish to take money from a government that will eventually demand doctrinal compromise as a condition of getting that money. Churches and parachurch organizations should never put themselves in a position where they must choose between the money they have become addicted to and their doctrinal commitments. "Conservatives" who support grants to faith-based charities or churches, or vouchers for Christian schools, foolishly gamble religious freedom for short-term monetary gain.