The Washington Post’s Wonkblog talks about a recent study that suggests that the American taxpayer subsidized religion to the tune of $82.5 billion per year. But is that a bad thing? The sponsors of the study say it is.
Ryan T. Cragun, a sociologist at the University of Tampa, and two of his students, Stephanie Yeager and Desmond Vega, took it upon themselves to figure it out. They’re not exactly disinterested parties; their research appeared in Free Inquiry, a publication of the Council for Secular Humanism. But Cragun is a serious sociologist of religion and the data seems to check out. The full scale of subsidies religions get is pretty staggering:
When people donate to religious groups, it’s tax-deductible. Churches don’t pay property taxes on their land or buildings. When they buy stuff, they don’t pay sales taxes. When they sell stuff at a profit, they don’t pay capital gains tax. If they spend less than they take in, they don’t pay corporate income taxes. Priests, ministers, rabbis and the like get “parsonage exemptions” that let them deduct mortgage payments, rent and other living expenses when they’re doing their income taxes. They also are the only group allowed to opt out of Social Security taxes (and benefits).
Dylan Matthews at Wonkblog says the study, if anything, underestimates the value of religious tax exemption:
The charitable deduction for all groups cost about $39 billion this year, according to the CBO, and given that 32 percent of those donations are to religious groups, getting rid of it just for them would raise about $12.5 billion. Add that in and you get a religious subsidy of about $83.5 billion.
Of course, these subsidies do more than reduce revenue. Property tax exemptions, in particular, distort real estate construction decisions and allocate more land to religious entities than would otherwise be the case, which drives up rents for everyone else (especially since religious groups tend not to buy property in high-density, skyscraper-style developments and instead get a whole lot of land for themselves)
My response to the study is “so what?” Besides the fact that the study is commissioned and published by a group that is intrinsically opposed to religion, the study begs the question: why use tax policy to promote any kind of charity or not-for-profit enterprise whether or not it is religious?
This not a study of how much American’s give to their churches, this is how much religious organizations get in tax benefits. The study apparently does not differentiate between congregations and religious institutions that might get the same tax breaks even if they weren’t religious, such as hospitals, schools, and social service agencies. The study is biased, even if the figures appear solid, because it is trying to make the case that the religious institutions are greedy parasites that take all this saved tax money to the bank.
Where I live, we have not one but two tax-exempt hospital corporations that clear tens of millions of dollars in margins and pay no income taxes on those margins and pay no property taxes for their considerable land holdings…including large swaths of land for future growth…and so on.
The same is true with the majority of the colleges and universities in my area, almost all of which are private non-profit institutions..
And it is not the free-ride they make it out to be. In my city, all non-profits pay a perfectly legal extra fee on our sewer bill. The intent is to capture some of the indirect costs associated with the college campus in our town but all non-profits that own property and have a water meter, including churches, pay it. Also, we pay–as do all churches and synagogues in our state–business privilege taxes and property taxes on church lots that are not used for a direct charitable purpose. So our adjacent parking lot, because it is technically a different lot than our church, is taxed. Yes, it is less than our neighbors, but I contend that our situation is no less fair than the non-profit community playhouse who also do not pay property or sales taxes or the above named college, but like us, pay all the usual employment related taxes.
And some of these large tax-exempt institutions are at least least nominally religious. One of those hospital groups is named for a saint because it was founded by Episcopalians. The same with the colleges in our area (one with Episcopal roots, another with Presbyterian roots, one more openly Lutheran, one definitely Moravian and two overtly Catholic)…so maybe they are all lumped into the above study?
The real question is why should we offer tax exemptions to any non-profit or charity in the first place. We do this because it is a public policy expression that we, as a society, want to encourage investment in things we deem valuable. When we want investment in technology, we create a tax-subsidized industrial park where inventors can invent and sell widgets. We want a ball park, we subsidize the ball park, so theoretically people will come downtown and spend money and improve business. It doesn’t always work, but that’s what we do.
We give tax exemptions to non-profits, including religious groups, because it allows people to come together and do something the community values but that the government cannot or should not do directly. We also promote things that the government could do, but groups of private citizens can do just as well or better.
We value health care. So we support private citizens who create charitable institutions to build hospitals and (presumably) use the money they make to hire the people and buy the things to do health care. And because it is a public good, we don’t tax their property or their income…if they are using that property and income to continue that public good.
The government does health care, as well. But not all of it and frequently they do it for populations directly associated with the people the government hired such as veterans, or for people no one else will care for, or to do the research that no one else will capitalize.
We value education. So we allow universities, private schools, kindergartens to be run by groups of private citizens who use both the tuitions they collect, the funds they raise and invest, and the tax breaks we give them, to carry on the mission we value…education.
Yes. Government educates too. But we prize the value of education so much that we are willing to let groups of private citizens take the public project of education in many forms.
We value the arts. So while governments might build arts centers and performance halls, generally this world is dominated by groups of local citizens who raise money to support the arts. We don’t tax their property or their income because we consider their private efforts a public good.
In our country, we state as a fundamental principal that government should not run religion nor use religious tests to make decisions about public officials or policy. But we also recognize that people all have their own beliefs and act on them. The tax exemptions given to churches and synagogues are an expression that spirituality and the corporate expression of the same is an essential public good that is only done best by gatherings of private citizens.
The tax exemption is also a mark of the value that government won’t tell people what to believe or how to act religiously.
If suddenly tomorrow all churches were taxed for income and property, most congregations would close and along with them the local charity done by private citizens would go away with them. The soup kitchens, clothes closets, reading programs and music and artistic offerings that go along with congregations would go away too.
Tax coffers would not suddenly fill up. Towns and cities would have a bunch of empty buildings thrown on the the tax rolls.
Now the religious beliefs would continue. For Christians, the Body of Christ would not even be scratched but continue on it’s faithful way. It would just look and organize itself differently. Whether or not that would be a good or bad thing is another question. The bottom line in this discussion is whether society itself would be enriched if we decided to end the religious exemptions this study details so finely.
As long as all religious institutions, even secular humanist ones, are treated the same then using tax exemptions to allow private citizens to carry out an agreed public good…the enriching of society by promoting spirituality in all its forms…is sound public policy.