Churches Have To Pay Taxes – Churches are considered holy places in the United States. Each state has hundreds of churches where Christians go a carry out their religious practices. Even the states where there is a Muslim majority have churches. Such churches, if taxed, could contribute a lot to tax collection, so should churches be taxed?
Tax exemption due to laws of the United States:
The government of the United States has provided a set of rules that gives judgment on payment of taxes for the churches. Churches located inside the territory of Unites states enjoy the benefit of not paying taxes. According to the 16th amendment of the constitution of the United States, congress members state that religious organizations should be exempted from paying any taxes. This amendment was named 501(c) 3.
501 c 3 stated that religious organizations and organizations with historic value would not pay taxes. Moreover, this law also gave other rules and also placed some restrictions on the churches. Churches were not allow to subject any of their earning to any private shareholder. The church is not a business, so thus it earns by collecting donations from the locals or companies that provide yearly donations to the church.
The church is not allowed to take part in legislation and also not participate in any political activities or support a political party.
There are several churches in different states of the USA and in those too where there is a Muslim majority. Section 501 c 3 acknowledges churches as charitable organizations and are exempted from paying taxes. They are exempt from paying taxes, so they can not involve in organizing benefits for the private people. If the court does not follow the law and carries out the above restrictions, the government would apply taxes on the church. These taxes would be excise tax which will have to be paid by the members of the church.
No taxes as churches are for the public:
If we morally look at this matter, we conclude that it is wrong to take taxes from the church. Churches are a source of spiritual enhancement for the public and a place of worship for them, so, therefore, it is just unethical and unlawful for the government to take taxes from churches. Churches are solely for the people and are also run the people, not the government. So due to such reasons, the government of the Unites states decided that they would exempt the churches from paying taxes.
In simple terms, taxes are applied to any organization or person making a profit. If we analyze churches, we find out that churches are not involved in any activity that has anything to do with business. It means that churches do not create profits, and so they are exempted from paying taxes. They are donations that are donated to them the public. The earnings are spent back on the residents in some way.
An issue of double taxation if churches pay taxes:
Let us look into this issue of double taxation that applies to churches. The churches need some source of income so that they could carry out their daily expenses such as the electricity bill or funds to pay the staff of the church. The government does not provide churches with incentives to pay for such spending, so how do they run? Churches are run the people and other private organizations. These locals and private organizations donate some of their money to the churches.
Private organizations and locals earning by working or having some sort of income for their personal needs. As a result, these organizations and the local public who donate to the churches have to pay taxes. The amount they give to the churches is taxed, which means taxes are given to the government before the organization or the locals fulfill their taxes.
The taxed donations paid to the churches cannot tax again. Therefore, this double taxation issue does not allow the government to force the churches to pay taxes. Members of the church pay their income tax, and these members also donate to churches.
IRS tax removal for churches:
A church is a nonprofit organization which means that whatever it does, it is for the benefit of the local public. The Americans have supported the fact of tax breaks of such organizations that do nothing but good for the public. Their support on this matter came in various forms. Protest taken out by the people moved the government and IRS to remove taxes from churches. Moreover, they also helped in eliminating taxes from the churches through their political affiliations.
Donations made are incentivizing to provide tax cuts to the donors. Churches are and will remain tax-free unless the public recognizes them as business and vote against a tax-free culture of churches. Moreover, churches do not have to register themselves under IRS for tax evasion. It is vital for other organizations to properly and legally enroll themselves under IRS to prevent tax payments. Furthermore, a different version of form 990 is give to the churches.
No taxes due to sphere of authority:
This idea dates back to the tax codes of the modern era. In the United States, three forms of authority apply to both the governing bodies and the public. These authorities are know as spheres or kingdoms. The first authority, which is also the foundation of all powers, is the authority of the family or the household. The second sphere or nation of authority is the state, and the last sphere of power is that of the church. The people in charge of the church are spiritual, whereas the others are worldly.
The role of spiritual authority allows the church to exclude itself from paying any taxes to the government of the United States. Even in today’s world, the temporary power of the state is accountable to the church. It leaves us with the result, that the state has no moral authority to apply taxes on the church. This idea is engraving into the constitution of the United States after the first amendment.
The amendment stated that the government was not responsible for constructing a church, and it was not responsible for the running of the church. Moreover, it could not apply taxes on the church and not interfere in matters of the church. These judgments gave the church a separate sphere of authority.
The separation between churches and the state:
Another reason why churches do not pay taxes is to create a moral difference between the working of the state and the working of the church. We can agree to the fact that allowing churches not to pay taxes does differentiate them from the state. It has been arguing before that a difference may create between the two bodies if tax rates were visibly lower for churches but this idea was reject most.
Tax evasion for churches promotes a healthy separation between the church and the state.
Improper identification of illegal churches:
Some people presented the idea that taxation on churches is vital and there should be a change in the legislature to bring churches under the tax laws. This was not possible due to religious factors and so another idea was presented. This idea enforced the US government to hand pick or identify only those churches which are violating laws of the state or are involved in unlawful activities such as political support.
These chosen churches would tax and the other ones were exempted from paying taxes.
It is not as simple as it seems as it is not possible for the government to investigate every church and identify some as legitimate and some as unlawful. As a result, the government decided to make all churches tax-free irrespective of the fact that they were lawful or unlawful.
Taxing churches would lead to taxing of other nonprofit organizations:
Before deciding to tax churches, the government has to consider other non-profit organizations too. Other nonprofit organizations such as women shelters, orphanage shelters, and schools would also have to be taxed. This would lead to a great tax collection but also would lead to the shutting down of many non-profit organizations. As a result, churches do not pay taxes to prevent other organizations from shutting down.
Additional tax charges lead to auditing churches:
If tax charges are applied to churches, the government of the United States has to pass a legislature for the proper management and handling of the revenue coming from churches. Currently, there is not such legislature to look into the matters of the church. Income is calculate subtracting expenses from the revenue. The US government has certain laws that look into legitimate business expenses and business performances according to their audit. This also gives the government the authority to auditory such organizations.
This would create a religious issue if the churches were also audited. The government would have to differentiate between the legitimacy of the churches. This differentiation is against the legislature of the United States that is the permission to practice any religion freely. As a result, churches are not forced to pay taxes.
Benefits large churches and harms smaller churches:
It is a common law of the world that the larger the organization the better it is. Larger organizations are financially stable and can handle small issues such as taxes with ease. As a result, bigger churches that have greater revenue in terms of donations would face no difficulty in hiring top-grade lawyers and tax firms to minimize their tax burden. Comparatively, smaller churches will lesser revenue will not have the resources to hire lawyers to reduce their taxes, and will eventually shut down due to non-payment of taxes. As a result, it was considered feasible for the government to not apply any sort of taxes on churches.
It is not the solution:
Imposing heavy taxes on churches to increase the revenue of the country is not the solution. It barely helps.
If we tax churches, they will do the same things that other businessmen do. Such businessmen increase their expenditure to such an extent that it reduces taxable income. The churches will follow the same procedure and reduce their taxable income.
A time comes that the taxable income reduces so much that it remains almost near to zero or can compare to zero. Thus the government reviews all these aspects and decided not to apply taxes on churches.
What would happen if churches would give taxes?
Everyone is taxed, and these taxes help in running the country. Religious organizations such as churches are not taxed. Have you ever thought that if these churches were taxed, how much revenue would they generate? A study carried out by the University of Tampa stated that the United States of America could receive up to 83.5 billion dollars in additional tax collection if religious organizations such as churches.
This amount is not even close to getting the United States near to universal healthcare, but it can help in fighting poverty in the United States and the rest of the world. It is impossible to apply taxes on churches in a country such as the United States. It is because almost half of the population of the United States of America visits the church at least once every month.
Cons if the government taxed churches:
There are several cons if the government decided to impose taxes on the churches. The main goal behind the taxation of churches would be of a person who wants to hurt the churches. Those specific groups of people or organizations must be trying to silence the church or cause them to fail.
Most people support the idea of such groups of people and organizations just because the teachings teach the church are against their moral conduct. Thus their sole purpose is to silence the church and prevent their teachings from spread to the locals. Allowing taxation on churches would motivate these people and cause further problems for the country.
However, America was solely established to follow the golden rule. It ordered the citizens of the United States of America to look into the golden rule for their moral standard. The church is a source where the golden rule is taught to the local public. As a result, churches hold a great value for Americans and the state of America. And so to collect taxes from these churches would hurt the public morally.
The vision of the golden rule would eventually die
Furthermore, these churches are not run or finance the government. They are run donations from the locals. So the people who give taxes to the government also take out some extra dollars from their income to pay as donations to the church even though the people who do not go to the church are taxed the same as churchgoers. Therefore instead of applying taxes on churches, the government of the United States of America should focus more on pulling out donations from people who don’t visit the church to equalize the ratio of payments given by churchgoers and non-churchgoers.
With taxes applied on churches, the smaller churches operating in smaller areas will eventually shut down. It is because such churches are overburden taxes and would shut down. Moreover, due to the smaller population, they will not bear their daily expenses due to smaller donations. The united states have a lot of smaller churches. If all those churches would shut down, the vision of the golden rule would eventually die and will not be followed anymore. Those teaching would reduce with the number of churches shutting down. Moreover, if the golden rule teachings are not followed, it will lead to more crime and less freedom.
Pros if the government taxed churches:
Fortunately, there are no pros that the government receives if they tax churches. The current legislature of the United States of America states that organizations cannot be taxed, and churches are also a part of organizations. Moreover, taxing these organizations would mean going against the legislature that is unlawful.
From all the data, we conclude that churches do not pay taxes because they are organizations that benefit the local public. As a result, it is morally and legally incorrect to impose such extra charges on churches.