Tuesday, May 25, 2004

Tax Exempt

After a storm of protest, Texas Comptroller Carole Keeton Strayhorn's office reversed her earlier decision and granted tax-exempt status to the Red River Unitarian Church in Denison. Unitarian-Universalists everywhere will sleep soundly tonight.

Several people wondered, after my previous post, why churches are tax-exempt in the first place. The original rationale was the separation of church and state, under the theory that the power to tax is the power to control. But churches fall more generally into the category of non-profits - like museums, charities, and schools - which aren't taxed because they provide services generally recognized as beneficial to society. (Yes, I know, many of you don't see any benefit to religion. I have a friend who can't stand art, but that doesn't mean that art museums should have to pay taxes.) They can't simply register as charities, as some people suggested, because charity is just one of their purposes. In the same way that a museum which runs an outreach art education program for inner-city children isn't primarily a charity, a church which runs a soup kitchen doesn't qualify as a charity. But charity isn't the only qualification for tax-exempt status - both the museum and the church are tax-exempt as non-profit cultural institutions.

If most of your exposure to religion involves televangelists, you may not realize just how many churches run on shoestring budgets. Most are supported purely by member donations, with perhaps a small endowment income from past donors. Being required to pay taxes would likely close their doors entirely - a result that some obviously hope for. I saw gloating speculation in the comments sections of other blogs - mercifully, not here - about the number of churches that would have to shut down in response to tax bills. I couldn't help but take that personally. My church is located on prime center-city real estate, and our $200,000 budget is barely enough to keep the roof repaired and cover the ministers' health insurance. Property taxes would kill us, and no doubt our historic 200-year-old building with its Tiffany windows would be torn down to make room for another shiny office tower. We'd probably move out to an unincorporated part of the suburbs, inaccessible to city dwellers without cars. In the meantime, wealthy suburban mega-churches would probably still flourish. Who would benefit, other than the developers?