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TMFBro (< 20)

Repeal tax breaks for religions and church-goers

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July 27, 2011 – Comments (31)

I read on Politico this morning that Pastor Rick Warren, author of a book my mom keeps wishing I'd read, Tweeted (but then deleted) the following: "HALF of America pays NO taxes. Zero. So they’re happy for tax rates to be raised on the other half that DOES pay taxes.”

First off, let's start with the fact that this isn't true. Yes, many Americans don't pay income taxes, but they likely pay other taxes, such as payroll taxes, sales taxes, gas taxes, property taxes, and somesuch. Whether the current tax burden is fairly shared is a legitimate debate, but let's please start with the truth. 

In that debate, I'd like to raise this question: Why are churches tax-exempt? Why do churchgoers get to deduct the contributions to their churches? Why do pastors get tax breaks? 

Here's something interesting: Google told me to read a New York Times article from 2006, which explains how Rick Warren fought for tax breaks for pastors. 

I see the value in religion. I grew up attending Catholic schools my whole life, was once studying to be a priest, and still occasionally go to church. But I don't think non-church-going taxpayers should subsidize my religion. 

Yes, many churches do good charitable work, which benefits society. Fine. Let them take a tax deduction for that work (with sufficient proof, of course), but not get a tax break for everything else they do and have.

I'm sure you have an opinion about this, perhaps even an article that estimates how much all these faith-based tax breaks costs America. I'm all ears.  I might even pray about it. 

31 Comments – Post Your Own

#1) On July 27, 2011 at 11:13 AM, outoffocus (23.21) wrote:

Well first, its not just "church goers" that get tax the tax break.  Anyone that chooses to donate to a nonprofit organization covered under the 501(c) statute get the tax break.  So I think your statement is unfair to say that "nonchurch goers are subsidizing church goers" when anyone, whether they believe in a higher power or not can get a deduction for charitable contributions.

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#2) On July 27, 2011 at 11:39 AM, Turfscape (40.32) wrote:

outoffocus,

Robert was clearly questioning why churches and religious organizations should be granted the status of a charitable organization. Running Sunday services and weekly confession is not a charitable act. Why give it tax exempt status? Running a food pantry IS a charitable act. Churches and any other organization doing THAT should absolutely be able to run those specific operations with tax exempt status.

I agree with him. I think the religion-based deductions are completely ridiculous. Imagine the impact if this and the mortgage interest deductions were repealed. It will never happen, because religious protests would be so extremely severe that no candidate could possibly hope to remain in office long enough to vote for such a measure...

...But Brokamp is right on this one. Churches are ultimately a membership-based business and should be treated (and taxed) as such.

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#3) On July 27, 2011 at 11:41 AM, Teacherman1 (48.52) wrote:

When I give to the Church, I never take a deduction. Since that is what I am returning to the work of GOD, out of the abundance He has Blessed me with.

Besides, I don't want the Govt to share in the Blessing I receive out of my obedience to His word. (:. (Actually, I ask Him all the time to Bless the United States). We certainly need it.

If a local congregation of the Church is following His will, most of what they receive should be going to do "good works".

Since they are by nature "non-profit", they have to use some for upkeep of the facilities and to pay staff.

Some congregations have abused this (as human beings abuse many things), by paying outrageous salaries, and hiring staff whose jobs could and should be done by volunteers within the congregation, and by building and maintaining extravagant facilities, but most do not.

Actually, we have come a long way. One of the primary reasons individuals had for coming to the "New World", was to escape a system where the "State" taxed everyone to pay for the "official church".

Just my 2 cents worth.

May the Lord Bless each and everyone who seeks His Blessing.

Have a great day.  

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#4) On July 27, 2011 at 11:43 AM, hawkise (< 20) wrote:

Flat tax no deductions

Then we know the true cost of running a govt

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#5) On July 27, 2011 at 11:49 AM, eksummers620 (53.09) wrote:

outoffocus is over simplifying this. There is a big different between public not-for-profits and religious instituations.

501c3 NFPs have extensive reporting that must be done to the IRS including the filing of a 990 or 990EZ. It is very difficult for sales tax exemptions. Their mission must be clearly of a not for profit nature (actually it has to be NGO or educational in nature). Their mail is audited by the Postal Service to ensure compliance. Many require expensive and exhaustive financial audits by CPAs. And the list goes on.

Religious institutions are a lot different. To quote the IRS webpage on filing requirements, "In addition, churches and certain church-affiliated organizations are excepted from filing." Can you imagine the tax windfall from the Catholic Dioceses alone if they had to pay just their property taxes?

 Religious organizations are incredibly protected in this country due to our history. The problem is this protection has become a luxury. At the very least, churches should have to file with the IRS to prove that their mission is primarily religious and not for profit or political.

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#6) On July 27, 2011 at 12:02 PM, mbronson1 (< 20) wrote:

For centuries, Americans have recognized that religious organizations promote a quality of life that cannot be engendered by any other organization. Religious organizations help build stable marriages and grow strong families. They promote public civility and moral clarity. They teach a work ethic, charity, compassion, mercy, honesty, kindness, peace and love. They minister to the poor and homeless. Governmental entities are unable and unequipped to inculcate these moral values and character qualities in our citizenry. They are unable to motivate our citizenry to good deeds. Only religious organizations have been successful in such inculcation and motivation.

Historically, our government has possessed the wisdom to recognize the immeasurable value of religious institutions to our society. Recognizing such, tax policies and laws beginning with the Bill of Rights all the way to today’s tax exemptions exist to propagate and promote the fiscal health of these organizations. This has helped these organizations freely operate and grow which has resulted in a quality of life that has helped America become second to none.

Sadly, in recent years this wisdom is being replaced by a belief that government can meet all of our needs. It cannot. Men and women have spiritual needs that can only be met by spiritual organizations. Government can no more replace religious organizations than religious organizations can replace government.

Repealing tax exemptions will restrict these organizations in their ability to inculcate these values and to motivate people to good deeds. Many of these organizations, especially rural, are small. Their budgets are very tight. Not only would some be severely restricted, many would have to close their doors.

Further, the power to tax is the power to control. Removing tax exemptions starts the process of governmental restriction and eventual control of religious institutions. This has happened repeatedly throughout human history. America has been great in part because the church has not been restricted by government.

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#7) On July 27, 2011 at 12:08 PM, TMFHousel (92.58) wrote:

Great post. 

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#8) On July 27, 2011 at 12:11 PM, PeteysTired (< 20) wrote:

I like how some people in this debt debate go out of their way to come up with new tax revenue, but won't come up with cuts. 

How about 2% across the board cut from 2010 spending levels?

Draconian?  It will never happen.  Never.  Nobody wants to get a cut.  And the debt goes on and on and on.

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#9) On July 27, 2011 at 12:21 PM, TMFHousel (92.58) wrote:

"How about 2% across the board cut from 2010 spending levels? Draconian?  It will never happen.  Never.  Nobody wants to get a cut.  And the debt goes on and on and on."

Total federal spending fell 2% from 2009-2010. ($3.51 trillion to $3.45 trillion)

http://www.whitehouse.gov/omb/budget/Historicals

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#10) On July 27, 2011 at 12:23 PM, Turfscape (40.32) wrote:

mbronson1 wrote:
"For centuries, Americans have recognized that religious organizations promote a quality of life that cannot be engendered by any other organization"

Well...religious Americans have recognized that their specific religious organization does that. Others have disagreed.

"They promote public civility and moral clarity."

Except when they don't.

"They teach a work ethic, charity, compassion, mercy, honesty, kindness, peace and love."

Sometimes. But sometimes they teach hate and intolerance. Other times they teach their followers to drop out of society and lace up their Reeboks for a trip to a passing comet.

"They minister to the poor and homeless."

Some of them do. And for the ones who provide food and shelter, they should defintely be granted charitable tax status for those activities.

There is nothing inherent in a religious organization that should grant it a status different than other charitable organizations. Do charity, get tax exempt benefits. Providing salary, house and car to a preacher is not charity, though. Funding the Vatican laundry budget is not charity. Running a television network that happens to only show televangilists is not charity.

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#11) On July 27, 2011 at 12:26 PM, leohaas (32.88) wrote:

Face it, Robert. Although we have a "wall of separation between church and state", the great US of A is in vast majority a religious country. The wall is more like a semi-permeable membrane: influence by the Government on religious affairs is a big no-no (except if you want to build a mosque), whereas influence of religious thought on how Government should be run is rampant. The issue you bring up is but one in a long list in this category...

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#12) On July 27, 2011 at 12:33 PM, outoffocus (23.21) wrote:

If churches are doing as they are supposed to do then they should be operating as secular non-profits do, in that they should be performing charitable activities as well. Hence the nonprofit status. 

As far as salaries go, the only tax that I'm aware of that they are exempt from is FICA (correct me if I'm wrong) and they have to make an election in order to be officially exempt from it. 

As far as how churches use their tithe and offering money to fund their operations, all nonprofits have some level of overhead, or else they would unable to run.  When you pay into a non-profit you are in fact paying for executive salaries, 403bs, and general overhead such as utililties and other building expenses. 

As with any other non-profit people have a choice as to whether they want to contribute to a church that is doing absolutely nothing for the community.  There are plenty of fraudulent non-profits out there that recieve plenty of contributions as well. 

But the point I was trying to make in the original comment was that the deduction for church tithes is available to all Americans regardless of whether they give to a church or not. Besides, I highly doubt that the VAST MAJORITY of charitable contribution deductions actually go to churches.   Like I said before, correct me if I'm wrong.

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#13) On July 27, 2011 at 12:35 PM, luffie (36.27) wrote:

I someone wanted to take away my deduction for donations to a church, fine, do so. That won't stop contributions, because most people donate to churches for better reasons than tax deductions. But if we are talking about taxing the churches receipts as income, or otherwise treating church as anything other than a charity in terms of its own revenue and expense, then I would be vehemently opposed.

 

 

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#14) On July 27, 2011 at 12:43 PM, Jbay76 (< 20) wrote:

Great points from turscape in #10, but eksummers620 provides more than what ifs and fluff, but a fair and logical solution to the issue. 

I use to live in a US territoy and there, the best job in the territory was to be a priest of a big church.  The priests made 6 figure salaries, the village built their homes, they got first dibs on food at all celebrations, all that tax free.  But lets tax the poor who are in need of help and the middle class who carry the majority of the burden...how counter-productive.

God will not mind if his Church and followers get taxed, taxation is not a part of His teachings.  What is due to Ceasar shall be paid to Ceasar. 

I am with teacherman1 when he says this "When I give to the Church, I never take a deduction".  To me, doing that sends a message that you are doing this donation in part becuase of tax benefits, not becuase you truly and sincerely want to help support the cause of your organization.

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#15) On July 27, 2011 at 12:52 PM, AvianFlu (32.91) wrote:

Possibly the largest tax we pay is inflation, which is caused by government spending and the associated printing. Those who supposedly pay no federal income tax pay the inflation tax in spades.

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#16) On July 27, 2011 at 1:05 PM, outoffocus (23.21) wrote:

I am with teacherman1 when he says this "When I give to the Church, I never take a deduction".  To me, doing that sends a message that you are doing this donation in part becuase of tax benefits, not becuase you truly and sincerely want to help support the cause of your organization.

I say to each his own. While I dont see anything wrong with not taking the deduction, I also don't see anything wrong with taking the deduction either.  At the end of the day if they did repeal the deduction I would continue to give as much as I was giving because for me its about more than a tax deduction. 

I believe as a general principle, NO ONE should EVER make a financial decision based solely on a tax deduction.  This alone has gotten alot of people in trouble financially (see mortgage interest deduction).   At the end of the day its simply foolishness.  All a deduction is is a discount, period. 

As far as the oft quoted Bible verse,  Then saith he unto them, Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's.(Matt 22:2), if Caesar says what I give to God doesn't belong to him (hence the deduction) then why would I give it to Caesar anyway? For me thats more money I can be giving to God.  Now if Caesar (e.g. the government) decides to change his mind and say that there's no deduction for charity then that Bible verse would be no less true and I would still have be obedient and still pay my tithes. 


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#17) On July 27, 2011 at 2:22 PM, mbronson1 (< 20) wrote:

The issue here isn't tax deductibilty for tithing. It's forcing religious groups to pay property tax and sales tax. That would cause the majority to drastically cease good works and many to cease operations altogether.

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#18) On July 27, 2011 at 2:29 PM, bluesguy84 (< 20) wrote:

I have a unique perspective here (at least based on what I have read so far) in that I am a Christian and my wife is a pastor.  We do benefit from these tax deductions.  Having said that I would object to any change to these tax deductions UNLESS there is a wholesale change to our tax code.

 I would like to see our entire tax code reformed.  Our tax code should only be used to raise revenue and not to enact social engineering.  And let me clear both conservatives & liberals have used the tax code to enact social engineering.

My tax code would be a flat rate.  It would tax anything that looks, smells, sounds, walks, or talks like income.  So if you can convert something into $s and spend it then it is income.  That means wages, interest, dividends, capital gains, etc all would be considered income.  There would be no deductions.  So no deductions for a mortgage interest, dependents, medical, or anything that is in the current tax code.  Also everyone from the poorest person to the richest person would pay the same %.

Finally since Corporations enjoy certain 'rights' they would also pay this tax.

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#19) On July 27, 2011 at 2:30 PM, Teacherman1 (48.52) wrote:

Actually, I think it was both.

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#20) On July 27, 2011 at 2:34 PM, bluesguy84 (< 20) wrote:

If you go over most church budgets, and I have over the last 25 years, you will find that at least 70% are used to support those who are already part of the organization.  There is nothing wrong with that.  But if you think a church spends most of its $ on outreach and helping the poor outside of its doors you would be sadly mistaken.

Most churches' budgets are dedicated to salaries and maintaining a building/facilities.  There is very little left for charity.

Most people who belong to a church do not tithe (give 10% of their salary).  The average church goer gives < 3% of their salary.  I venture to guess these numbers get worse the bigger the church.

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#21) On July 27, 2011 at 2:34 PM, djemonk (< 20) wrote:

Everyone wants a solution, as long as they don't have to pay for it.  That's one thing that's common between Republicans, Democrats, Christians, Athiests, pastors, and regular taxpayers.

That's basically why we're in this mess.

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#22) On July 27, 2011 at 2:35 PM, outoffocus (23.21) wrote:

bluesguy84 

Agree 100%.  There is no need for the tax code to be as convoluted as it is. 

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#23) On July 27, 2011 at 2:50 PM, TheChronos (98.35) wrote:

I grew up in the church and went to a Presbyterian college and even I would say:

The church is a business - and should be treated as such.

(I know only of the Presbyterian (pca and pcusa) churches, so I only speak of them:) 

    - It offers products and services (yes, ultimately that's what they are)

    - It teaches it's customers/subscribers that they "ought to" give 10% of their income... in lieu of charging for these goods and services. Nevertheless, it collects a revenue in exchange for what it provides.

    - It competes with other churches, claiming that what it offers is in some way better than other churches

    - It uses psychological means to convince customers they need what it offers. (The medium may be different, but that is exactly what advertising is.)

      - It has a hierarchical structure in which the board (called the "Administrative Committee" in the PCA) decides what percentage of all tithes it collects (aside: tithe and offering amounts are made public online; if they were doing God's work would they collect these amounts for themselves?)

I have contemplated writing a blog on this, hoping to help prevent others from being duped into droping 10% of their salary into a corrupt organization like I did for many years, but feared for my life. ...my wife would kill me, not the clergy.

(caveat: Other churches are different. But I do know this about the Presbyterian churches.)

 

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#24) On July 27, 2011 at 4:07 PM, Bkeepr100 (< 20) wrote:

Fine, take away all nonprofit tax breaks for everyone.

Let PETA, humane groups, serra club, and all other non profits pay these taxes on their ill gotten gains as well.  You will hear screaming like never before as these groups help to share the pain the government is causing.

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#25) On July 27, 2011 at 5:07 PM, lemoneater (75.70) wrote:

I had a double take when I saw the title tax break for church goers, but others clarified that this refers more to tax breaks on donations.  

Some of us would debate that Rick Warren's church is a typical church since it looks more like a corporate campus and is one of the largest churches in the U.S. I'm not an expert on how one defines a non-profit organization, but I imagine that the proceeds from his books sales are accounted separately from the donations for his church. Where does the business end and the church begin? I think businessman/pastor or politician/pastor can be an unharmonious hybrid.

(I have a problem with pastors acquiring great wealth at the expense of their flock. Here is what the Apostle Paul said in reference to his own ministry http://www.biblegateway.com/passage/?search=2%20Thessalonians%203:7-11&version=NIV)

However, leaving Rick Warren's church aside, repealing tax breaks would provide hardships for many little churches which just meet operating expenses, support a few missionaries, and are literally non-profits by any definition of the term. However, if the taxes were repealed many small churches would move into homes so it wouldn't be the end of the world.

I will have to pay attention the next time I go to Crossway I was sure that they charged tax.

Very interesting topic!

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#26) On July 27, 2011 at 6:54 PM, davejh23 (< 20) wrote:

Why start with religious organizations?  Do you know what percentage of donations to other "charitable" organizations actually go to charity work?  Do you know what their top executives earn?  A couple years ago we had a giving campaign sponsored by my employer...they would match contributions to one certain charity, which I won't name (you can probably guess).  The marketing materials they sent out boasted that 23% of donations go directly to those in need.  I laughed out loud when I read that.  I'm guessing that this is good by "charity" standards...why else would they put that in their materials?  I'd prefer to donate to smaller organizations run by volunteers that pay their own way on humanitarian aid trips and 100% of donations actually help those in need.

FWIW, I agree that a church that exists to support a pastor/preacher is not a church...it's a business.  However, not all churches are the same.

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#27) On July 28, 2011 at 9:45 AM, dwot (51.27) wrote:

I have seen churchs limit community services to church members.  It seemed to me their tax deduction status for donations gave a responsibility to serve the community and certainly that was when I questioned tax deductions for many things.

I am not sure how donations to political groups works in the US, but in Canada it is obscene.  It far exceeds just giving you a tax exemption for the money given.  You get a 75% tax credit on amounts under $400, so giving $400 means you are only paying $100.  It is very close to a direct transfer of tax dollars to political campaigns. 

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#28) On July 28, 2011 at 10:06 AM, dwot (51.27) wrote:

But then, where I currently live we have one missionary and he is an enormous foundation of support in our community, and unfortunately leaving this summer.  Certainly he defines why one would support his work with tax deductions.  We also have the catholic church in our community that does no community work.  The pastor comes to town maybe once per month to give a service and that's about the extent of it.  The tax support for that one service per month probably significantly exceeds the support for the missionary due to the high transportation costs, yet the missionary guy is there for every family in crisis facing serious illness or the death of a family member, does numerous programs for children and a model of a good parent for our community.  

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#29) On July 28, 2011 at 12:33 PM, Turfscape (40.32) wrote:

davejh23 wrote:
"Do you know what percentage of donations to other "charitable" organizations actually go to charity work?  Do you know what their top executives earn?"

I do know these things, because non-religious charitable organizations are required to file detailed information on these topics in order to maintain a charitable tax-exempt status. I'd like the same to hold true for the religious exemption.

I don't want to end the benefit for any church's charitable works...but they should only receive tax-exemptions for that charitable work. Not for daily operations relating to the church itself.

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#30) On July 28, 2011 at 12:34 PM, Turfscape (40.32) wrote:

By the way...EXCELLENT debate topic, Robert!

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#31) On July 31, 2011 at 12:34 AM, whereaminow (35.09) wrote:

Yes, more taxes are the answer.

David in Qatar

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