Didn’t they become a religion after the FDA went after them over the e-meters? I remember that the FDA was cracking down on quacks and unapproved medical devices.
Their income is supposed to be used for charitable purposes: worship services, missionary work, soup kitchens, etc. This is true of any charity. We’ve opted not to tax them because we want to encourage this charitable work. Also, many charities provide services that the Government would otherwise be called upon to provide, so even though the Government is foregoing taxes upon them, it nonetheless benefits by allowing charities to assume those roles.
Note that tax exemptions specifically targeted only to churches (i.e., specially favoring churches but not other charities) may violate the Establishment Clause of the 1st Amendment. Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989).
The Supreme Court has stated that taxing churches is more likely to constitute an unacceptable entanglement of the Government with religion than exempting them from taxes does:
“Either course, taxation of churches or exemption, occasions some degree of involvement with religion. Elimination of exemption would tend to expand the involvement of government by giving rise to tax valuation of church property, tax liens, tax foreclosures, and the direct confrontations and conflicts that follow in the train of those legal processes.” Walz v. Tax Comm’n, 397 U.S. 664 (1970).
I disagree. A church is not a business in the conventional sense. It does not produce a product or service for sale, rent, or lease. It does not manufacture anything or serve as a place of commerce. I don’t see it as being “like any other business.”
RR
Sure it does. It provides a connection to god(s), whether real or imaginary, in exchange for tithing or membership dues or whatever financing structure is in place. Churches even advertise their products and services.
The difference between a church and a neighborhood gym is simply one of perception. If the gym has a pet charity - the AHA, for example - the logical difference may be entirely nonexistent.
The practical difference is that a church is exempt from both taxes and legislation regarding unfair or deceptive business practices.
Thanks everybody for the helpful replies.
Yes, it does. In the USA, the definition of “church” for tax purposes is drawn pretty broad, but it has its limits. I have no handy cite, but I recall individuals who tried to declare themselves a church and the IRS drew a line that excluded the obvious dodgers.
Mainstream religions have no problem. Groups like Scientology and others who don’t have a traditional worship history can get into hot water and spend a lot on lawyers. Of course, if they win, they can afford the lawyers, see? So it all works out.
Personally, I think churches should pay exactly like everyone else. If they were all taxed equally, I can’t see how the argument could be made that the government was “establishing” one particular religion over another.
There are two parts to the freedom of religon section of the first amendment: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” I believe the standard interpretation has been that taxing churches would prohibit the free exercise of religion.
Whether this is the case I suppose all depends on your interpretation of “free.” Or rather, who is free. Is it the person who is free to choose his religion? Or is it the religion that is free to operate free of government interference? Or both?
Well, but the difference between a for-profit company and a non-profit is what happens to the money it takes in. A for-profit company is permitted to transfer that money to its shareholders, while a non-profit is required to spend it on its avowed charitable purpose. There are areas where their operations are similar (both can employ and pay workers; both can build buildings for themselves), but ultimately the disposition of their income is what determines their status, at least for purposes of the tax law.
The way the law has developed, “establishment” has never really been a matter of “favoring one over another.” If the Government were to propose a church-only subsidy program, that would probably violate the Establishment Clause even if the subsidy was available to all churches. It would be an excessive “entanglement” with religion.
There are several different kinds of tax that organizations can be exempt from.
First, is whether an organization is exempt from local taxes such as property tax, and often sales tax. I’m not familiar with the details of this exemption. As mentioned, part of the reason churches fall in this category in the U.S. is the ‘power to tax is the power to destroy’ theory; part is also a desire to support charitable organizations that do good.
Second is whether an organization pays tax on its income. In general, in the U.S. a non-profit organization doesn’t pay federal income tax. This is entirely due to Congress passing a law to achieve that because they wished support organizations that benefit the public good. It is assumed that since a non-profit doesn’t directly benefit the owner, it must benefit the public (there are some tests in the IRS code, basically to make sure the organization really isn’t out to benefit an individual or otherwise be used as a tax dodge).
As mentioned, non-profits are defined in the IRS code at 501 ©. Most non-profits fall into either subsection 501© (3) or 501©(4), which brings us to the final point.
Organizations can, in addition to the exemptions above, be ‘tax deductible’. For these organizations, individuals who donate to the organization can deduct the donation from their personal income when the individual calculates their personal income tax. (In other words, if I make $100,000 in a year, but donate $10,000 to the Cecil Adams Scholarship Fund, I pay income tax on only $90,000, if the Fund is ‘tax deductible’). These organizations are mostly 501©(3) organizations, and are forbidden from engaging in lobbying and other political work.
In contrast 501©(4) organizations (and that’s how they’re often referred to) may lobby, endorse candidates, and so forth, but donations to them are not tax-deductible.
The last distinction is one that has come up in the U.S. recently, as churches are not allowed to endorse candidates.
Finally, there are payroll taxes that employers pay. No organization that I am aware of is exempt from this. Nor does being an employee of any kind of organization in general ndividual from paying income tax on their pay.
A gym could also be a non-profit organization too.
That seems like a pretty flawed interpretation, given that we don’t consider taxes on newspapers, ink, or printing presses or televisions to be “abridging the freedom of speech, or of the press”, and we don’t consider fairly-applied public gathering permits to be infringing the right of the people “peaceably to assemble”.
Churches are so special that even a property tax which is applied to absolutely everything and everyone else would somehow constitute government meddling in religion, even though laws that similarly apply without regard to content are not considered infringing of speech, or press, or assembly.