Should Churches be Tax Exempt?

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Even before the IRS ever existed, churches were tax exempt.  In fact, as the U.S.Supreme Court acknowledged in 1970 in the Walz v. Tax Commission case, exempting churches from taxation is an “unbroken” history that “covers our entire national existence and indeed predates it.”  Because of this unbroken history, churches have been included and recognized as tax exempt in every income tax code passed by Congress since the very first attempt to pass an income tax code in 1894.  In fact, the federal tax code recognizes this special exemption for churches because churches are the only organization not required to seek advance approval of tax exemption.  They are considered automatically tax exempt simply because of their status as a church.  This “unbroken history” of tax exemption for churches that predates our national existence is not something that is lightly cast aside.  And, as history demonstrates, churches have thrived and have benefitted society in many ways as a result of the freedom that flows from tax exemption.  It is a mythical caricature that most churches want to be tax exempt simply so they can unfairly hold on to more money than anyone else.  This is a falsehood promoted by those who simply do not understand the facts.

Churches have been at the forefront of many of the beneficial social movements throughout American history.  Historians agree that America owes its independence, in great degree, to churches and pastors who spoke freely and passionately from their pulpits in favor of independence.  Pastors during the revolutionary time period became known as the “Black Regiment” due to their black clerical robes and the fervor with which they supported independence.

Churches also led the fight to end child labor, promote women’s suffrage, and were instrumental in ending slavery.  Let’s not forget pastors like Henry Ward Beecher who spoke with great influence against slavery from his pulpit at Plymouth Church in Brooklyn.  And, of course, it was a pastor, the Rev. Martin Luther King, Jr., with the support of churches, who helped to end segregation.  A concurring opinion handed down by the U.S. Court of Appeals for the Ninth Circuit as recently as February 25, 2009, cites such examples and concluded:

“An unregulated, unregistered press is important to our democracy.  So are unregulated, unregistered churches.  Churches have played an important—no, an essential—part in the democratic life of the United States....  Is it necessary to evoke these historic struggles and the great constitutional benefits won for the country by its churches in order to decide this case of petty bureaucratic harassment?  It is necessary.  The memory of the memorable battles grows cold.  The liberals who applaud their outcomes and live in their light forget the motivation that drove the champions of freedom.  They approve religious intervention in the political process selectively:  it’s great when it’s on their side.  In a secular age, Freedom of Speech is more talismanic than Freedom of Religion.  But the latter is the first freedom in our Bill of Rights” (Canyon Ferry Road Baptist Church of East Helena v. Unsworth).

Since our country was founded, churches not only led great social movements, but also freely preached directly on political candidates’ qualifications for office.  That was no problem when the Constitution was signed, or when the first commissioner of internal revenue was appointed in 1862, or when the federal income tax was authorized by the 16th Amendment in 1913.  Nor were churches transformed into political machines.  Churches simply spoke when their moral voice needed to be heard—even during election season—and decided for themselves how they wanted their pastors to preach.

Tax exemption enabled churches to exist without unnecessary encumbrance by the government and to be the moral force in these great social movements in American history.  This historical record of tax exemption is an important reason churches should continue to be tax exempt.