Should churches be exempt from all taxes?

Brian (Yes)

The first amendment of the US Constitution identifies the separation of church and state and the freedom of speech as key components to the foundation of the United States of America (1). This means that the government should have as little involvement with religious institutions as possible, and vice versa. Taxing churches would break this separation and therefore violate the US Constitution. Churches receive almost all of their income from after-tax donations made by its members or the community. Therefore, imposing taxes on churches would result in double taxation.

It is difficult to see Lakewood Church in Houston, TX that has an annual budget of $90 million and not think that they should be paying taxes (2). However, we have to keep in mind that only about 0.5% of churches in the US are megachurches (3). While larger churches may be able to handle losing their tax exemption status, many smaller churches already struggling to get by would be forced to close. 

Besides the costs of operating the church (salaries, electricity, etc.), the church would ideally be using a good portion of its donations to help serve their community. The countless ministries offered by churches depend on the needs of their specific community. Some of the most common services are soup kitchens, homeless shelters, and support groups. It would be difficult to calculate the value of all of these programs, both financial and otherwise. Nevertheless, it is clear that these ministries provide much relief to the federal and state governments that would otherwise have to establish programs to meet these needs (4).

James (No)

Churches tax exemption can be traced back to the early days of the Roman Empire. Churches played in ensuring their followers were law-abiding citizens. At a time when the majority of society was largely uneducated, churches worked in cooperation with government to ensure constituents remained morally grounded in the church teachings and maintained societal order. In exchange, the government rewarded churches by providing tax relief. Clearly, tax exemption is what binds Church and State, not what separates them.

Churches do not operate the same as a not for profit. In the same way that gyms, yoga studios and other health centers provide lifestyle and well-being services, churches also sell spiritual health products. Churches provide a number of services that are available for a nominal, and required “donation”, or fee, in addition to regular fundraisers, capital campaigns, and merchandise sales that occur at a frequency often enough to be considered revenue. While some might argue that their purpose is charitable at its truest sense, many churches offer little to no benefit outside of its own paying members.

Finally, if churches are permitted to receive exclusive tax exemption, they should be held to the same standards as other nonprofit organizations by demonstrating the impact they are having on the communities they serve. Just as nonprofit hospitals and social service organizations are legally required to report their financial and social impact, churches that receive tax-exemption should also be transparent with their use of funds and held to the same standard of other nonprofit businesses.