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Pennies from heaven; it's time for Uncle Sam to pass the collection plate.

Elizabeth Lesly is a business writer in Albany, New York.

When Joyce Siegrist's coven, Our Lady of the Roses Wiccan Church, was granted tax-exempt status by the state of Rhode Island in 1989, she was elated. The 40-member congregation is now saving "a good amount of money" in sales tax on the candles, incense burners, chalices, candlesticks and black robes needed for its rituals, which are held several times a month in a rented room of the local Grange Hall.

Why do witches merit a cut rate on newts' eyes, bats' wings, and other party supplies? Well, goes the received wisdom, because those objects are just as sacred to a witch as a crucifix is to a Catholic or the Torah to a Jew. In the eyes of the government, all religions are created equal. That kind of religious relativism seems to make sense-except that it begs the real question: Why does any religious organization deserve a government subsidy in the first place? None does, but all receive one, thanks to a misreading of the First Amendment's religion provisions.

Tax the churches? The idea's been intellectually mothballed for years. These days, it's the province of the fringe-radical anticlerics, the Murray O'Hair school of secular humanists, and crabby fair-tax fanatics. But if you set aside your perfectly reasonable anti-anticlerical bias for a moment, you'll discover that to favor taxing churches you don't have to be a nun-basher avenging the times Sister Mary whipped chalk at you in fourth-grade Latin. In fact, the Supreme Court, in a series of decisions over the past eight years, has ruled that taxing churches is perfectly legal. Several church-and-state experts familiar with the cases--especially a decision in January 1990-predict that local governments will subject churches to real estate taxes before the end of the decade.

The purpose of the First Amendment's religious provisions was to prevent the government from discriminating against or in favor of any religion-in particular or as a group. From the point of view of the Constitution, then, there's no difference between taxing all churches equally and not taxing them at all. (Of course, the state can't tax only churches, even if it taxes them all equally; that would violate the free exercise clause.) But from the point of view of the average taxpayer, there's a mighty big difference: As near as one can figure, the wealth of American religious organizations is approaching a trillion dollars; some church watchers estimate that religious organizations own one-fifth of all private property in the country. The Village Voice found in 1987 that the Catholic Church was New York City's largest private landowner. Meanwhile, the homeowners of any given community are kicking in with ever-escalating property taxes to help provide services like garbage removal and police protection to tax-exempt churches that only one-third of them attend.

This is not to say that churches should be taxed on property used primarily for charitable purposes-soup kitchens, say, or schools; like other nonprofits, churches should receive a Good Samaritan exemption. This is also not to say that our society shouldn't value the purely religious functions that churches perform; taxing something is not generally a sign of public disapproval. But property used primarily for religious purposes should be taxed like any other property. "Strong religious adherents think that religion should be free of any government action; they put religion above government," said Philip Kurland, a constitutional law professor at the University of Chicago. "The Constitution didn't do that."

The highest-profile examination of churches' tax-exempt status in recent years was trotted out in 1978, in the Chevy Chase/Goldie Hawn film, Foley Play. The running gag in the movie was the villainous Tax the Churches League, an organization of wackos so obsessed with church wealth and power that they planned to assassinate the Pope to make a political statement.

One of the terrorists explained her bitterness this way: "Ten years ago, we attempted a peaceful campaign for the taxation of these billion-dollar corporations. But they support the economic system, so the economic system supported them. We were attacked, laughed at, and finally imprisoned."

Pretty nuts, right? Well, a century and a half earlier, James Madison, whose Memorial and Remonstrance against Religious Assessments had provided a key philosophical underpinning of the church-state relationship, cautioned against much the same "absurd" realities. In an 1832 essay, Madison warned that besides the danger of a direct mixture of Religion & civil Government, there is an evil which ought to be guarded against in the indefinite accumulation of property ... by eccleslastical corporations.

"Are the U.S. duly awake to the tendency of the precedents [of church wealth] they are establishing, in the multiplied incorporations of Religious Congregations with the faculty of acquiring & holding property real as well as personal?" Madison continued: "And must not bodies, perpetual in their existence, and which may be always gaining without ever losing, speedily gain more than is useful, and in time more than is safe?"

Have the churches, as Madison feared, accumulated more than is safe?

No one knows for sure, because religious organizations aren't subject to any financial disclosure laws. But there is enough evidence to suggest that cities and states could generate quite a bit of tax revenue by milking these sacred cows. Onward Christian brokers

A 1931 University of Chicago Department of Economics study used data from the Bureau of the Census to estimate the value of overall church wealth divided by the population. The results were staggering for the time:
 Total church wealth $ per capita
 1890 $65,037,000,000 $1,036
 1912 $183,300,000,000 $1,965
 1922 $320,804,000,000 $2,951

Without even adjusting for inflation or appreciation, and multiplying the per capita value of church wealth in 1922 by the present U.S. population of approximately 250 million, the value of such wealth today would be more than $700 billion.

Of course, estimates based on 1931 numbers leave a little to be desired. Unfortunately, the Bureau of the Census stopped collecting information on church wealth in 1936 because the funding dried up. These days, the only sliver of church wealth that anyone can guess at is real estate holdings. Even this information is elusive: Local tax assessors are notorious for not keeping current assessments on property they can't tax; a lot of church property is listed on local tax rolls under a different name; and no one has the stamina or the zeal to visit every municipality in the country and comb through tax rolls in search of these imperfect assessments.

But Martin A. Larson and the Rev. C. Stanley Lowell made a pretty big dent. They took on the tedious process of reviewing the tax rolls of 14 large cities and published their findings in 1976. The property in these 14 cities represented only 3 percent of all the private property in the country. Larson estimated then that more than 10 percent of all the real property in the country was owned by churches and exempt from taxes-at a value of at least 155 billion in the 14 cities alone. The exemptions cost those cities over $4 billion in lost tax revenue.

Today Larson can't even guess how much the property holdings are worth after the economic boom of the eighties. "It would be much, much more now," shouted Larson, who, at 94 and nearly deaf, hasn't updated his research since 1976.

For an example of what all that untaxed property can mean for one state, consider New York. The state's Board of Equalization and Assessment in 1988 counted 7,533 church- or clergy-owned properties in New York City alone that were wholly or partly tax exempt. The estimated value of these thousands of properties: $3.99 billion. For the entire state, the 29,801 church properties in 1988 had an estimated value of $9.6 billion.

Meanwhile, New York City is again flirting with financial crisis and cannot provide even the most basic services for its lower- and middle-class citizens. And with a credit rating the lowest in its history, the state of New York is struggling to recoup revenue from any source, however meager. In January, it cut the value of its once-coveted Regent's scholarships to just $25 per student for the spring semester.

Jon Murray, son of super-atheist Madalyn Murray O'Hair and president of United World Atheists in Austin, says that 20 percent of all the private property in the United States is owned by religious groups. "I think everyone should understand that churches are big business," Murray said. "They have huge payrolls, take huge collections every Sunday. They have incomes like big corporations do. And as a big business, they should bear part of the burden of keeping up the country-roads, parks, etc. If they love the people and love the community, why don't they put up the money to keep the community going?"

Amen and G-men

Zealots like Murray drive people in the religious community nuts. But if they resent his charges, why don't they step forward and release the figures that would prove his claims absurd? Right now, religious organizations are the only nonprofit groups in the country not required to report financial information to the Internal Revenue Service. Occasionally, the value of a denomination's billion-dollar pension fund or a million-dollar donation to an individual church will be mentioned in the religious press, but there is no comprehensive accounting of church wealth.

If churches' financial information is shielded from the prying eyes of the IRS, how is the IRS able to uncover any abuses of tax-exempt status? It relies on "newspaper articles [and] concerned citizens to just bring information to our attention," said Wilson Fadley, a spokesman at the IRS. Now that's reassuring-an enforcement system reliant on tattle-tales, ax-grinders, and the press, which has trouble reporting on the subject since no information is publicly available. In 1989, 464,136 religious organizations were registered with the IRS. In the past decade, the agency has revoked the tax exemptions of only about 20.

The administrative roadblocks to starting an investigation are formidable. One of the seven IRS regional commissioners must approve any audit, and since there is little financial information to substantiate an investigator's initial suspicions, few investigations are launched. Those that are conducted tend to be aimed at churches that stand out-those with pastel-suited preachers, politically unpalatable doctrines, arcane sacraments-because they are the ripest targets for media scrutiny. It's invariably the sects whose adherents lack connections that see their exemptions challenged.

"It's a very, very sensitive issue," said Larry Gibbs, who was IRS commissioner from 1986 until 1989. "The organized and main-line religions in this country are very jealous of their prerogatives, and any indication at all that the IRS is doing anything at all to violate a right of a church will guarantee that the IRS, Congress, and the media hear about it from organized religion."

Gibbs, who would seem to have been in the best position imaginable to know about tax-exemption abuses, said that churches' immunity from filing tax returns makes it nearly impossible for anyone in the secular world to learn anything about churches' operations. "As a former tax administrator and a taxpayer, I have concerns, particularly based on some of the things that have happened in the last 10 to 1 5 years. I cite the TV evangelist cases and I also cite some of the very abusive tax shelter cases. I wonder if the same things are going on," said Gibbs, who is now an attorney in Washington. Because there's no paper trail, he said, "I have no way of knowing."

Papal bull

This hear-no-evil, see-no-evil approach to policing exemptions doesn't provide much temporal incentive for religious organizations to stick to the straight and narrow. Because of the lack of disclosure and oversight, the public hears only about the handful of spectacular cases that the press digs up-the air-conditioned dog houses and payoffs to prostitutes. Yet there have been enough such cases in recent years to suggest that some of the massive religious tax exemptions go to support less-than-spiritual pursuits.

Last year, Archbishop Eugene A. Marino of Atlanta resigned after word of his longtime affair with Vicki R. Long leaked out. After a Coopers & Lybrand audit, it became clear that the archbishop was providing Long with a lot more than affection-between 1986 and 1990, Long received more than $21,000 from the funds of the archdiocese and two of its parishes. While it's troubling that Long received all of this tax-exempt money, it's even more disturbing that the payments went undetected for nearly four years.

It was only after the Rev. George Stallings Jr. of Washington, D.C., broke with the Catholic Church to form the afrocentric Imani Temple that the Church thought to check into how he had handled the finances at St. Teresa of Avila parish. Last year, The Washington Post reported that Stallings for years had used church funds to lavishly renovate his private Anacostia home and had put at least one of his lovers on the parish's payroll.

For all of its good works, the Catholic Church has had more than its share of bad apples in recent years. According to the Los Angeles Times, the number of court cases charging Catholic Church personnel with sexual abuse approached 2,000 in 1990, and the Church has paid out as much as $300 million to settle such claims in the past six or seven years. The Times cited a 1985 internal church report that estimated the organization could face $1 billion in such claims by 1995. Clearly, the founding fathers never contemplated that 1) a religious organization would ever have the funds to blow a billion dollars on one project in 10 years or 2) that they would blow it to cover expenses for such earthly pleasures. There may be no violations of the letter of the religious tax exemption statute here (though one would hope that the IRS is investigating), but surely there is a violation of its spirit.

Breaking down the wall

The First Amendment, to put it simply, prohibits both state sponsorship of and state hostility towards religion. Government relations with religious bodies must fall in the neutral zone between. The way the following Supreme Court decisions define that neutral zone, it is up to the legislature to decide whether to tax or not to tax religious organizations.

* 1970: Walz v. Tax Commission of New York. The Court held that a property tax exemption that applied not only to churches but also to "nonprofit, quasi-public corporations" was constitutional.

* 1989: Texas Monthly v. Bullock. The court held that a sales-tax exemption that applied only to periodicals published by religious groups was unconstitutional.

* 1990: Jimmy Swaggart Ministries v. Board of Equalization of California. The court held that a sales tax on religious organizations that also applied to other charitable, nonprofit, and local government entities was constitutional.

The language used in the Swaggart decision was so broad that many legal experts say that other church property-like investment income, donation income, and real estate assets-can now be taxed. Michael W. McConnell, the University of Chicago law professor who argued the case for Jimmy Swaggart Ministries and lost, saw the decision as the beginning of the end of some of the tax exemptions for the nation's religious bodies: "Now, church activities and church properties are just as fully subject to taxation as any other properties may be."

Still, the Rev. Dean Kelley, counselor on religious liberty to the National Council of Churches, is not about to throw in the towel. Church property should not be taxed because churchgoers "already pay a fair share of running the commonwealth," he reasons. "Why be taxed again? It comes from the same sources-members and contributors....

"The cost of running a city should be borne by the producers of wealth, such as profit-making corporations and employed individuals. Providing police and fire protection to the whole city is part of the cost of running the whole city and should not be charged to nonprofit organizations. [A fire department is] employed to protect the community against fire. Whether it's a church or haberdashery, it does not greatly affect costs to the fire department."

But taxes aren't assessed according to who is making a profit. Laid-off factory workers or money-losing businessmen aren't freed from their property-tax obligations. They all pay, whether or not they belong to any church in the area, and therefore cover the fire protection and other city services enjoyed by a religious institution that means nothing to them.

In his Memorial and Remonstrance against Religious Assessments, Madison argued for the freedom of religious expression, but the main point of the treatise was that citizens not be required to pay taxes that went toward supporting or maintaining religions to which they might not subscribe. These days, with more than half the country rarely, if ever, seeing the inside of a church, and many cities and states struggling to come up with the money to pay for basic services, Madison's message is more important than ever. The many should not be taxed to support the religious beliefs of the few. It's time we put some of these billions for heaven to work here on earth.
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Title Annotation:tax the churches; includes related article on church and state
Author:Lesly, Elizabeth
Publication:Washington Monthly
Date:Apr 1, 1991
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