A Note on Tax Exemptions for Churches

[marylandblue]

81. So many red herrings, I'll be eating fish for a month

Last edited Wed Sep 12, 2018, 07:51 PM - Edit history (1)

But I'll try to keep it simple. We are talking about we think the law should be, not what it actually is. So it's nice that you agree with the Supreme Court and didn't make up your own opinion, but your opinion would be perfectly fine even if you did make it up.

The Walz case was about whether the state could exempt religious institutions from tax. The court said yes for two reasons:
1) The exemption was granted to a broad class of other entities like nonprofits, schools etc., so it wasn't establishing a religion or favoring any one religion.
And
2) Not taxing churches maintains the wall of separation.

They could have stopped at point 1. Point 2 appears be a dicta that answers a different question - could the state tax a church if it wanted to? Apparently not according to Walz, but since that wasn't question, that's really up to a future court.

What Walz doesn't tell us is why the exemption exists in the first place. The exemptions go back to Colonial times. In some colonies, people had to pay a tax to the church. This was the case in Massachusetts until 1824. A 1799 law in New York exempted churches, any public place of worship, houses owned by ministers, schools, court houses, alms houses, jails, and libraries. Even back then, the religious exemption was just one of many that had some public benefit. But the religious exemption wasn't a separate case regarding the Federal First Amendment. We know this because the Federal constitution didn't apply to states back then, and the 1777 New York Constitution then in effect, although it provided for free exercise of religion, had no establishment clause (New York did not establish an official religion, but South Carolina did, and Massachusetts required each town to establish a religion).

New York did provide for free exercise of religion though. But they thought religion was so important that clergy were prohibited from holding public office so they could attend to their "great duties" of serving God. There's a wall for you! But not one we would recognize today. This constitution further exempted Quakers from the militia but required them to pay a tax instead. Depending on how you read it, they are either giving a special favor to one religion, or imposing a special tax on it, or both. But regardless, it would violate the 1st Amendment today.

Most states got rid of all these special dispensions or restrictions in the 19th Century and for those that didn't, the 14th Amendment forced the issue. But the religious tax exemption remained. Some people in the 19th century, including Ulysses Grant, wanted to get rid of the religious exemption for the same reasons MM provides in his OP, but the idea went nowhere.

So to sum up, the religious exemption, was always understood to be a subsidy for a benefit that may or may not be worth it. That the Walz court said it didn't count legally as a subsidy is no more to the point than Justice Robert's declaration that the Obamacare individual mandate penalty is actually a tax. Even though Obama himself said it wasn't.