Pennsylvania, Taxes, & Religion

[David B]

The October issue of Church & State discusses Pennsylvania's fight to promote religion by creating a special sales tax exemption for religious publications. The state courts have ruled against it twice, but Gov. Tom Ridge isn't letting that stop him as he moves on to the U.S. Supreme Court.

Normally, folks who are doing stuff like this at least try to pretend they are doing it for a Constitutional reason. Not so with Ridge, who said, "It is entirely appropriate for the state to encourage religion in our communities by exempting religious publications from the sales tax." It is? Says who?

What's interesting, and not brought up in this blurb, is that a law like this would put the Pennsylvania into the position of evaluating what is or is not a religious publication. The Bible is; what about the Satanic Bible? Magazines published by the local church are; what about Free Inquiry, published by the Council for Secular Humanism? How about The Celestine Prophecy, which is fiction (see the mailbag item on that topic) but which has allegedly non-fiction workbooks and the like? The list could go on and on.

[ravenous]

I say let 'em. It's gonna be more work than it's worth to enforce and eventually they'll realize. Do they already have a multi-tier sales tax system? If not, aren't the merchants complaining?

My WAG is if they're going to treat every religion equally it's not unconstitutional. Tax breaks for religions are already on the books. I should read what the judges said. Got a citation?

Rav

[David B]

They've admitted it's to promote religion. I doubt they will allow atheist publications the same tax exemption. I doubt they even thought it through. And the courts have twice ruled it unConstitutional so far. All in all, I don't really think it's Constitutional.

But, no, I don't have a citation. The ruling was Haller v. Commonwealth (that may be "Commonwealth of Pennsylvania," but that's not the way it's referred to in the blurb).

[tracer]

Out of curiosity, are churches exempted from Federal income tax because taxing a religious organization would be "prohibiting the free expression thereof"?

[ravenous]

I don't think they meant free as in gratis. ;) Yet another limitation of the English language.

Rav

[Boris B]

There is a blanket Federal exemption for all non-profit organizations. The Catholic Church is no more or less tax-exempt than Bill's Atheist Checkers Club and Debating Society - until either of them starts paying dividends.

I think the Pennsylvania tax code is blatantly unconstitutional, but only since the 14th Amendment, and Supreme Court decisions ruled that the 1st Amendment bound states as well as the Feds (Gitlow v. New York (1925)). "Congress shall make no law respecting an establishment of religion...."

Pennsylvania is trying to treat religious organizations preferentially; they are respecting an establishment of religion ipso facto. There is very little difference, economically, between a tax exemption for religions, and a fine for secular organizations. So, the NRA, NOW, Planned Parenthood, the AARP, and the all the labor unions better join an organized religion or cough up the cash.

And of course, that organized religion will never include the Church of Satan, the Cult of Cthulhu, or for that matter any serious religion outside the "Judeo-Christian" tradition.

Welcome to the age when pro-clerical political movements come above ground.

[Boris B]

Woops. Didn't mean to imply that the quotation came from Gitlow. It's just the opening to the First Amendment.

[Doctor Jackson]

My WAG is if they're going to treat every religion equally it's not unconstitutional.

That was my initial thought, too, rav, but I would take it farther and suggest the sales tax exemption be extended to the publications of all non-profit organizations. I think that would satisfy the Constitutional questions, but what a nightmare to track at the retail level. How would a store clerk know whether that Bible was printed by a for profit org. vs a non-profit org? A special "tax free" stamp, maybe? Who is going to track compliance? The IRS?

Maybe it's better left alone.

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[Polycarp]

I believe, and would ask Manhattan to verify (since he has the resources handy), that New York's sales tax law gives a blanket exemption to all 501(c)(3) organizations; they simply have to produce a copy of their IRS documentation to claim it (once; it's kept on file by the business if purchases are made regularly).

This allows the state to "encourage" any religious/charitable group without showing unconstitutional preferentiality. And, as Boris noted, there is no distinction made between the Amalgamated Atheists of America, the Universal Free Life Church, the Polish War Veterans of Greater Schenectady, the Bassett Hospital Ladies Auxiliary, and the Catholic Diocese of Buffalo.

[C K Dexter Haven]

Poly, the way it works in Illinois is that you get a letter from the non-profit organization, affirming your identity, the identiy of the nonprofit organization (tax number) and that the purchase you are making is for that organization. Then the sales clerk notes the numbers, and doesn't charge sales tax.

That's excluding the nonprofit org from having to PAY sales tax. I'm not sure how you would determine that you shouldn't CHARGE sales tax on certain magazines (assuming that Pennsylvania finds a way around the Constitutionality, say by exempting all non-profit publications.) I suppose it'd be built into the wossname electronic code that they scan for the price of the magazine.

Sounds like a nightmare to administer.

[Polycarp]

North Carolina taxes everything! Well, almost. :)

In New York, a bona fide periodical is exempt from sales tax. Newspaper, weekly or monthly magazine, doesn't matter who or what the publisher or the content is: it's exempt. The working rule is that it must have a date on the cover (which can be month and year but not season and year or just year).

How one exempts an item from being taxable is by doing it. If, for example, you pass a law that says
Section 1. Any person or corporation offering a good or service to another for renumeration shall add to the contractual price the sum of five percentum of said price and collect the same in behalf of this State.
Section Two. No later than the fifth day of the following month, any person or corporation who has collected sums of money pursuant to Section One of this act shall report the total goods and services vended to the public and the total collected in behalf of the State, and shall remit the latter to the State Treasurer.

Okay, there's a law for collecting taxes. So we add another section:

Section Three. Notwithstanding the previous sections, no such sum shall be collected for the following categories of merchandise:
1. Salmon, whether fresh, smoked, frozen, or canned; but this exception shall not extend to ready-to-eat dishes which may include salmon as an ingredient.
2. Merchandise sold at rummage or yard sales, provided that such sales last no more than three days and are conducted no more often than three times per year; but this exception shall not extend to goods sold for a sum in excess of ten dollars.
3. Religious publications, defined as books and periodical literature published or distributed by a religious corporation or association which has registered with the Secretary of State of this State as such.
....

Constitutionally, the state appears to have under current law the right to tax or decline to tax anything it takes into its collective head to do so to, provided that it does it equitably in accordance with due process of law as required by the 14th Amendment. (I don't say this approvingly, simply reporting what I understand the facts to be.)

[pldennison]

Let's not get confused--yes, nonprofit and charitable organizations are exempt from paying sales tax at the register, and need only produce a copy of their tax-exemption letter (the retailer will keep a copy on hand.)

What this law proposes is that Joe and Jane Consumer won't have to pay taxes on religious books, but will on everything else that is taxable. I have a suspicion that the reason PA is considering this new law is that their old one lost in Federal court and the SC refused to grant cert on the appeal. Under that law, Christian Bibles were tax-exempt at the register no matter who published them, but Islamic and Jewish writings (among others) were not.

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[tracer]

Boris B wrote:

There is a blanket Federal exemption for all non-profit organizations. The Catholic Church is no more or less tax-exempt than Bill's Atheist Checkers Club and Debating Society - until either of them starts paying dividends.

Except that the burden of proof as to an organization's non-profit status is much lower for churches than it is for other non-profit organizations. According to James Randi's The Faith Healers, an organization need only be "organized for religious purposes" and "have a congregation" to qualify as a church and be tax-exempt. Other organizations have to apply to IRS for 501(c)(3) exemption, I believe -- and what is done with the revenue of non-church 501(c)(3) orgs is subject to much greater scrutiny.

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