Should the Church Kiss Its Tax-Exemption Goodbye?

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Though sad and striking to say, Christendom is no more. There is not one nation left on earth that publicly avows the vital role of the Catholic Church in human society. Christ has been sold for thirty pieces of silver throughout the world and, in many cases, been betrayed by a kiss as well. And that kiss, that false, political show of devotion that Judas first made famous, has been given to the Church in the form of blessings which are really curses—and one of those curses may very well be the Church’s tax-exempt status in the United States.

As it was from A.D. 306 to 337 in Rome under Emperor Constantine, the Catholic Church has been free from the obligation to pay income tax to the United States federal government ever since the country was founded, and it received official tax exemption status in 1894. This means, among other things, that the Catholic Church doesn’t pay property tax and all donations to it are incentivized by being tax deductible. It also means, among other things, that the Church—like all nonprofit institutions—is not permitted to engage in any kind of political campaigning according to the Internal Revenue Code.

This latter point is of particular concern these days as the morals and truths the Catholic Church upholds are under intense attack by political movements and politicians. Abortion is a political issue. The homosexual lifestyle and the transgender movement are political issues. Withholding Holy Communion from public servants who are clearly not in communion with the Church is a political issue. 

It’s not hard to pick up the murmur that if the Church wants to get involved in politics, it should start paying taxes—and that reality may be coming. In a recent column here at Crisis, Casey Chalk recalled Texas gubernatorial candidate Beto O’Rourke proclaiming that any religious institution that fails to recognize gay “marriage” ought to have its tax-exempt status revoked; and he’s not the only one who concludes this. With Archbishop Cordileone and Speaker Pelosi and the SCOTUS’s upcoming Roe v. Wade decision, we should prepare to see the writing advance on the wall.

And while the loss of such a financial benefit may cripple much charitable good that the Church is doing in this country, such a loss may actually be an occasion for great gain as the Church and her ministers and faithful would have to embrace a leaner way of worship and evangelization. That may be just the hard medicine our softening Church needs. Perhaps it’s time to make the Catholic Church poor again.

The Church can claim protection from government regulation by the “Free Exercise” clause of the First Amendment, so a tax break isn’t obviously necessary for Church and state separation. But we have seen in the established system that there are subtle modes of influence and interference—forbidding of prayer in public schools or religious imagery in public squares, for example. The government has already restricted religion and religious freedom in this country, and the so-called separation of church and state has not prevented that.

We no longer have lawyers and politicians like St. Thomas More who defend the Faith per se, but we do have bishops. But the bishops of this country are far too enmeshed in the machine of government policy and propaganda to preach truly and freely as bishops. The ties to the federal government through the Church’s nonprofit status make the bishops unable or unwilling to take the stand that is sorely needed. As officers of tax-exempt corporations, they are too hampered by legal requirements and too used to kowtowing in the veiled language of social acceptance and social justice when it comes to the urgent moral issues that threaten the strength of the Church in America. 

That is, if they speak at all. Many are silent, which is even worse. Bishops should be free to speak openly and directly to their flock about our civil and moral obligations as Catholics. But the 501(c)(3) laws prohibit political affiliation and action, diverting Catholic organizations like the USCCB with bureaucratic red tape and the temptation of financial opportunity—and even covering up crime.

While this gagging and inaction may be enough all by itself to justify the Church kissing the government right back to say goodbye to its tax-exempt status, there are, of course, other considerations. The exemption creates a certain comfortable separation of the Church and the state, which can be desirable unless it results in a subjugation of the Church by the state, which seems in keeping with what’s playing out. Then again, tax exemption is a privilege, not a constitutional right. And with tough economic times that are growing ever tougher, the country may not be able to subsidize the Church as it has (and perhaps never should have). 

As already alluded to, much of the Church’s charity work—such as homeless shelters, assistance for needy families, support for abusive situations, etc.—would certainly be impeded (and placed before the government to undertake) given such a dramatic shift in its financial circumstances. But again, the Church may actually afford to undergo such a transition, even if the government would be hard-pressed to pick up the slack. More good, however, may be possible from men and women, priests and bishops, sisters and brothers, rolling up their sleeves again in alleys and hospitals and neighborhoods.

Yes, much good is accomplished and many are given precious, even lifesaving, help; but the Catholic Church, one of the wealthiest organizations in the world, doesn’t exactly have a crystal-clear financial track record, with many questionable programs and unworthy recipients and secular agendas. The Church could use more accountability. Even to this day, churches are not required by the IRS to file a Form 990 to report their income, finances, and corporate structure as all other nonprofits are. 

Of course, many clergymen who are working for the Church are of very modest means. Throwing the Church to the wolves that would come howling if its tax-exempt status, or particularly the “parsonage exemption,” was removed would throw many of these good people into desperate financial straits; and the missions they have sacrificed for would certainly suffer if not collapse. In this sense, the government allows the Church to be unencumbered by the burden of property taxes and the like, but the strings attached may not be compatible in the long run, even if that means a period of tremendous trial and hardship. Some alliances are not worth the Church’s trouble because they lead to a compromise in the Church’s purpose.

On the other hand, though it is easy to assert that the government has manipulated the Church and her ministers in many ways under the current arrangements, losing those arrangements wouldn’t necessarily reduce federal power because the government would certainly close churches that failed to pay their taxes, besides other claims to control. So, while we cringe to see bishops refraining from biting Uncle Sam’s hand while it feeds them, losing the tax-exemption may, in some cases, be like jumping from the frying pan into the fire. No one wishes to see the government loom even larger over the Church by making the Church beholden to it. But the bitter support the Church receives today from secular taxpayers who hate it also seems inconsistent with the nobility of the Faith. At the same time, many Catholic taxpayers are supporting lifestyles and luxuries, and even sins, that have no place in the Church.

Weighing the question here even briefly, it is clear that there is no way of knowing for certain whether the loss of the Church’s tax-exempt status would prove beneficial or disastrous. But one thing that is certain—besides death and taxes—is that the Catholic Church will be with us to the end of the world and that the gates of Hell will not prevail against it—and that is not a matter contingent on taxes. It may well be, once all is said and done, that the Church might return to a beautiful grassroots organization that pulls itself up by its bootstraps instead of running with all the worldly carrots and sticks afforded by the princes in whom we place no trust.

Christ pointed out the image of the “divine” emperor to the Pharisees and taught us that the coin can go to the state, but men must go to the Church—even if that means going to the poorhouse, or the prison, or the gallows. The state must never be divinized over the divinity of the Church. If that perversion is indeed upon us, then there should be resignations from those financial programs that prevent bishops from being bishops and Catholics from being Catholic. If speaking out against political quacks and immoral laws means paying taxes and losing federal funding, then the Church should choose to render to Caesar what is Caesar’s in order to give to God what is God’s.

[Image Credit: Shutterstock]

Sean Fitzpatrick

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Sean Fitzpatrick is a senior contributor to Crisis and serves on the faculty of Gregory the Great Academy, a Catholic boarding school for boys in Pennsylvania.

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