Are churches tax exempt as a matter of privilege or right? What does tax exception cost communities and churches? Christianity Today has been hosting an interesting debate on these issues. Paul Matzko, Assistant Editor for Tech and Innovation at the CATO Institute, argued in the cover story of this month’s issue that tax exemption comes at a high a cost to the communities in which they are located:
This feeling that churches don’t contribute to the common good is not uncommon in America. There are many municipalities that view churches as basically parasitical, receiving all the protection and benefits of local government without bearing their fair share of the financial burden. Cash-strapped towns have frequently tried to use zoning laws to block the development of new churches and are only stopped when the federal government enforces the religious land-use laws that Christian groups advocated for in 1993 and 2000.
Matzko also argues that these “tax privileges” are harmful to the church itself as,
..the church’s prophetic witness is certainly harmed when its clergy are not free to condemn corrupt politicians who prey on the poor, the vulnerable, and the sojourner… tax exemption will always be a potential tool for majoritarian political interests to suppress minority interests.
The argument is clever invoking many historical and legal details which, while factual, are misleading. Michael Wear, chief strategist for the AND Campaign, ably points this out in his response essay, ‘No Friend of Tax Collectors’:
Contrary to Matzko’s portrayal of an across-the-board religious tax exemption as a vestige of European-style establishmentarianism, houses of worship are tax exempt to respect religious freedom and the separation of church and state. What offends American sensibilities about the European tradition is not tax-exemption, but the practice of taxing disfavored denominations, and using those funds to prop up the state and its favored religion.
Consider Isaac Backus, who Matzko invokes as an “evangelical dissenter” against government favors for religious groups. He was that, but hardly because he felt churches should pay taxes.
Wear also notes that the restrictions on political speech for tax exempt organizations, which apply equally to all non-profits, prohibit only the explicit endorsement of a candidate or lobbying for a particular piece of legislation. They do not, “…prevent pastors or churches from teaching on issues like poverty, abortion, the environment, or any other issue of public import.”
Wear and Matzko both acknowledge “halo effects,” indirect ways in which congregations contribute to the economies of their local communities, but such an appeal to utilitarian calculus to justify tax exemption seems to miss the point. Life is economic, but economics is not all of life.
What is most disturbing about Matzko’s essay is not the economic reductionism but the impoverished sense of the political and common good it demonstrates. It is a classic example of seeing like a state, reducing the complex interdependencies of our social life to a single state-centered public life. It is only by misunderstanding our life together as the bare relationship between citizen and sovereign, subject and ruler, that our contribution to the common good could be calculated by a tax receipt.
The Christian conception of the common good encompasses, as Lord Acton said best, a society beyond the state with individual souls above it. The common good is the product of both individual persons living out their vocations and institutions exercising their God ordained roles, fulfilling their duties, and sharing their own unique gifts.
Paul Matzko is concerned that the tax exemption breeds resentment, Michael Wear fears his proposed remedy would accelerate polarization, but Jesus has told us, “ye shall be hated of all men for my name’s sake: but he that endureth to the end shall be saved.” (Matt. 10:22) It is in the nature of haters to hate, and money will not change that. Ceding to the state sovereignty over all of civil society including the family, the church, school, business, and community groups guarantees their destruction. The common good can never be realized without the work of diverse and interdependent persons and institutions doing their own part in all spheres of human life.