Should the Church Pay Tax?

You may have seen the hashtag #taxthechurches which has risen in popularity on social media recently. It normally accompanies a post that erroneously claims that the federal government is missing out on billions in tax revenue by not taxing churches.^[1] And there’s the statistic that’s been circulating claiming that if churches were taxed, then everyone else would only owe 3% in taxes. Not true.

If you do the math, the government isn’t missing out on as much as everyone thinks. This is because church employees pay income taxes and payroll taxes individually. Then you’d have to consider how much the government would have to spend to compensate for the loss to the community since churches would have to de-fund programs to pay taxes.

Why should churches and nonprofits keep their tax-exempt status?

Taxes Equal Control

Taxes = control. If you don’t believe me, stop paying them. Stop paying taxes on your house or your car and see how long you’re able to keep them.

One of the main reasons churches are tax exempt is so the state has no control over the church. This is the Establishment Clause in the First Amendment that ensures that the government won’t ever be able to poke its nose into the church’s affairs.

Money is control. If churches paid tax, it wouldn’t be long before the government could have an opinion about how things are done and pass legislation on what the church can/can’t do or can/can’t say from the pulpit.

Value Add

There’s a long history of not taxing the church that goes back thousands of years to the Roman Empire. ‘

Constantine was the Emperor of Rome from 306 to 337. During this reign, he granted the Christian church an exemption from all forms of taxation. This tradition continued in Medieval England, which waived property taxes for churches. Then in 1601, the English Statute of Charitable Uses provided tax exemption to churches and all other charitable institutions in England. The U.S. followed suit. Churches in the U.S. have been tax exempt since the country’s founding.

Why has the church been tax exempt throughout history? Because of the value add that many churches bring to their surrounding communities and the nation.

In 1924 in the case of Trinidad vs. Sagrada Orden, the U.S. Supreme Court stated that the government provides church tax exemption because of the benefit that the public derives from church activities.

What did the court mean by this? Most churches actively serve their congregations and the surrounding communities. I’ve lost count of how many churches in my area have food pantries and daycare centers, support underprivileged kids, open their doors as polling places, provide counseling and mentoring, and offer disaster relief and humanitarian aid, just to name a few ministries.

When a hurricane hit my city a few years ago, churches quickly mobilized and were at the forefront of recovery. Disaster relief ministries from all over the country came to assist. Over the past century, churches have founded hospitals and foster care offices and relief organizations in my city and across the nation. Many churches today have community outreach programs and support local public schools, host daycares and after-school programs, and I could go on and on.

I’ve only mentioned the physical, tangible contributions. I haven’t even gotten into the true purpose of the church, which is salvation and discipleship. If you aren’t familiar with those words, they mean transformation through faith in Christ from the inside out. At the end of the day, you can enact law after law, but it’s only behavior modification. The church teaches Christ followers how to put off sin and become like Jesus in what we say, how we think, and what we do. Being a Christian has changed my life. This is true hope, true heart change beyond what physical laws can accomplish.

My point is that if churches paid tax, you’d have to take into account how much the government would need to spend to compensate for the loss of ministry and community impact. Churches would likely have to withdraw from or lower funding on some of these programs so they have enough to pay taxes and balance the books. Who’s going to fill in the blanks? When people say the church should lose its tax-exempt status, you’re just asking to pay more taxes to fill the void the church would leave if they didn’t exist.

[1] https://taxfoundation.org/blog/church-taxes/#:~:text=%E2%80%9CIf%20churches%20paid%20taxes%2C%E2%80%9D,likely%20stemming%20from%20an%20error%2D