Your church is not one of them.

[wnylib]

16. No, I did not miss any part of your post.

That suggestion sounds good on the surface, but misses a few things about how most churches operate. It assumes that they are a profit making enterprise that should be taxed on their income, with an exception for charitable work which would operate separately from the religious services. But, aside from the obvious grifters who use religion for themselves, churches are not profit making businesses. What would a tax be based on? The donations of parishioners? Also, the facilities used for religion and those used for charity overlap to a point that it would be exorbitantly expensive and not feasible to separate them. More on that later.

Churches already have budgets with separate categories for maintenance, salaries of employees, electricity, gas, water, miscellaneous expenses, and charities. The charities are further subdivided according to external programs that they support, i.e. food banks and homeless shelters, and internal programs like tutoring children, preparing meals for homeless and needy people. The prepared food is donated and prepared by volunteers. It's not a profit making restaurant or catering service.

Salaried empoyees are the pastor, organist, secretary, and maintenance person in many churches. But in small ones some of those positions are often voluntary.
Some churches run day care programs for infants and toddlers, so there are teachers/caretakers to pay. Money for salaries and equipment for the day cares comes from parents who can afford to pay. Some parents can't afford it so church donations and fundraisers make up the difference. Church day care centers have to meet all government regulations and inspections, of course.

Here's the problem with trying to separate religious activities from charity. Most churches have a kitchen and an attached fellowship hall. The kitchens usually have a large oven with stovetop burners, a refrigerator and freezer, pots, pans, a large set (or multiple sets) of dishes and flatware, various cooking utensils, and a dishwasher. Depending on the size of the congregation, it might be a restaurant type industrial dishwasher.

The fellowship hall might be used on Sunday morning for adult Bible study, with coffee and snacks from the kitchen. But during the week, the fellowship hall is used as a cooling shelter during heat waves, or a heated shelter during blizzards and deep freezes. It can be used on a Sunday morning or weekday evening for a dinner or reception (with coffee and snacks from the kitchen) to welcome a new pastor, or for a social event for the church's youth group. But on other occasions, it is used for a fundraising dinner, open to both the congregation and general public, with a fee for the dinner. But the funds are being raised to donate to a domestic violence shelter, or to a rehab facility for addictions, or to provide local police with equipment and training to use Naloxone for opioid victims.

So the kitchen and fellowship room are used for religious activities AND charities. The food for meals and snacks is either donated by church members or bought from the appropriate budget category. Meal preparation, servibg, and cleanup are done by volunteers for religious and for charity functions. Surely you would not suggest that there be two separate, fully equipped kitchens and fellowship halls.

Sometimes a church member will bequeath a specified amount to the church for a specific purchase, like a new refrigerator to replace an old run down one. Should that be taxed since the new fridge will be used for religious AND charity functions?

Except for salaried employees, all work done in the church for running the Sunday School, singing in the choir, ushering people to seats, providing flowers for the altar, taking the youth group on outings, is done by church member volunteers. Raising charity donations, preparing and distributing donated food, delivering clothing and toiletries to various shelters, etc. is also done by volunteer church members or non members who just want to support worthy causes.

Should the volunteer work be counted as taxable income based on the value of the work done ? Should the donated food, clothing, and toiletries be taxed for their money value as "income?"