Churches Can Do Whatever They Want

Sam is doing double and triple duty these days.  Over at By Common Consent, he delivered a sermon on church tax exemption.  The most interesting part, I thought, was the following:

But My Church Isn’t Helping the Poor

. . . . 

And that’s the case even if they do no poor relief. The Supreme Court considered the question of whether a religious organization that didn’t help the poor could qualify for (property) tax exemption. It’s conclusion?

We find it unnecessary to justify the tax exemption on the social welfare services or “good works” that some churches perform for parishioners and others — family counseling, aid to the elderly and the infirm, and to children. Churches vary substantially in the scope of such services; programs expand or contract according to resources and need. As public-sponsored programs enlarge, private aid from the church sector may diminish. The extent of social services may vary, depending on whether the church serves an urban or rural, a rich or poor constituency. To give emphasis to so variable an aspect of the work of religious bodies would introduce an element of governmental evaluation and standards as to the worth of particular social welfare programs, thus producing a kind of continuing day-to-day relationship which the policy of neutrality seeks to minimize. Hence, the use of a social welfare yardstick as a significant element to qualify for tax exemption could conceivably give rise to confrontations that could escalate to constitutional dimensions.

 

That is, while churches are welcome to do what we colloquially think of as charity, the Supreme Court declined to bring the idea of poor relief into the definition because different churches do different amounts of it. The government telling a church what its religious obligations are would implicate the First Amendment’s Religion Clauses.

We often think of exemption for houses of worship (church tax exemption) as the lesser of two evils; we can establish via exemption, or prohibit via taxation.  I guess I never paid much attention to Walz after the Court decided that government may chose exemption.  But Sam points out that having made that choice, government may not then evaluate their works to determine whether they are worth tax exemption.  For churches, its all or nothing.  I think that sentiment is confirmed in other places as well.  The Church Audit Procedures Act expresses the sentiment that "you have granted us tax exemption, now go away and leave us alone."  According to the EO CPE Text:

While desiring to protect churches from undue interference by the IRS, Congress recognized that an increasing number of taxpayers had, in recent years, utilized the church form primarily as a tax-avoidance device. Congress believed that the IRS must retain an unhindered ability to pursue individuals who use the church form in this manner. The Act attempts to resolve these competing considerations by providing detailed rules that the IRS is to follow in making tax inquiries to churches, both as to tax-exempt status and as to the existence of unrelated business income. These provisions emphasize the need for a speedy determination of church tax liabilities and, where possible, a determination without unnecessary examination of church books and records. Congress believed that these provisions will protect the rights of legitimate churches without unduly hindering IRS efforts to eliminate tax-avoidance schemes posing as religious organizations. Further, the Congress believed that the adoption of detailed statutory rules will reduce misunderstandings between churches and the IRS and allow for a more stable and cooperative examination process.

I don't think the Act strikes an even balance, nor should it.  It almost takes an act of Congress -- and even then the act would be unconstitutional probably -- to get salary information from megachurches.  Some of the churches to whom Grassley sent letters years ago responded by pointing out that "according to the constitution what we pay our leaders is none of your damn business, sir!"  Grassley didn't push back much.  In fact, I think the Mormon Church could have raised a constitutional issue to the fine imposed by the SEC recently.  Read Sam's post on that last week, but it seems to me that if the $100 billion under management were entirely attributable to tithes and offerings, the Latter-Day Saints could have said the same thing to the SEC that other churches said to the IRS.   Instead, they did the wise thing and paid a $4 million dollar fine.  Do you know what percent $4 million is of $100 billion?  Its a whole lot less than 1% and a whole lot less than it would cost in legal fees to vindicate a constitutional right, I'll tell you that.  Maybe 30 seconds worth of interest on the $100 billion.

But I am not mad at churches.  My only point is that churches ain't gotta do a damn thing. Churches can pay leaders as much as they want, they can talk about politics all they want, they can intervene in campaigns all they want, and they don't have to help the poor if they don't want to.  Let's just be real about this thing.  They literally exist by unregulated common consent.  

darryll jones