Why aren't (tax exempt) churches allowed to be political, and why not tax all churches?

Question

Politics and religion often intersect in the United States and many other countries. However, churches generally don't support political candidates (though certain religious leaders do because they're not specifically doing it through the church). There's a reason for that: if they do take on such roles, they have to be taxed.

There are two questions that I am asking. First, why do churches have a tax incentive to not specifically support partisan causes or endorse political candidates? Second, why not tax all churches because of separation of church and state (that religious institutions should not be prioritized over secular ones)?

Note: I use church as a word for any religious institution, not necessarily a Christian one.

Answer 1

Why aren't tax exempt church organizations allowed to be political?

Every organization is given tax exempt status based on what it does. That's because we want to give tax exemption for some activities (such as giving food to the hungry) but not to others (such as selling luxury yachts).

When a church applies for tax exempt status it declares that it will be almost entirely doing religious activities. If it was actually doing other activities then it wouldn't have been given tax exempt status. If it ends up doing political activities and not religious ones then it is violating the conditions of its status.

If this were not the case then it would be easy to get around tax laws. You would start a church, give money to it and get the tax back, but have that church actually do entirely political campaigning. You are essentially getting tax exemption for a political campaign.

In most cases churches are allowed to say political things within limits. For example, they can say "it's morally right to give food to the starving", and let the congregation draw their conclusions about who to vote for as a result of that, but not to say "Vote for Joe Smith because he will give food to the starving". There is a certain amount of grey area there, and most organizations are permitted to do some lobbying in areas related to their main function, as long as it isn't their primary activity. However once the church becomes mainly about politics it's going to be in trouble.

In the United States churches are really expert at pushing the boundaries of this line, and frankly it isn't enforced that much.

Answer 2

Why do churches have a tax incentive to not specifically support partisan causes or endorse political candidates?

Almost all religious organizations are chartered as 501(c)(3) organizations. All 501(c) organizations are non-profit, tax-exempt organizations. The special category of 501(c)(3) means that if, for example, someone donates a lot of money to such an organization that person can deduct those donations from their taxable income. It has to be a lot of money because the standard deduction has become fairly generous. That person cannot use donations to other 501(c) organizations as tax deductible.

A clause was added to section 501(c)(3) of the IRS code in 1954, the Johnson Amendment. This clause precludes 501(c)(3) organizations from participating in, intervening in, or campaigning on behalf of or opposed to ny candidate for public office. This, along with the tax deductibility of donations, is one of the things that incentivizes churches (and other charitable organizations) from supporting partisan causes or endorsing political candidates.

The US federal government does not have property taxes or sales taxes, but many states do. Religious organizations (and in some states, other charitable organizations) are typically exempt from those taxes. In most states, a church needs to be a 501(c)(3) organization to qualify for such exemptions. In many (most? all?) states, non-501(c)(3) organizations that are exempt from federal income taxes do have to pay property taxes on the properties they own and sales taxes on the stuff they buy. This gives a huge added incentive to churches to avoid explicitly endorsing political causes / political candidates. Losing 501(c)(3) status would have huge consequences.

Why not tax all churches because of separation of church and state (that religious institutions should not be prioritized over secular ones)?

That's not going to happen in the US. Freedom of religion does not mean freedom from religion. Courts have long recognized that making religious organizations tax exempt does not violate separation of church and state, so long as the regulations apply equally to any organization that somehow qualifies as religious.

That said, some churches have been pushing the boundaries. Pushing the boundaries hard. Whether the Johnson Amendment has any teeth is dubious. Recently (15 May 2022), a well-known Tennessee pastor has explicitly pushed those boundaries by claiming that “You cannot be a Christian and vote Democrat in this nation” and “If you vote Democrat, I don’t even want you around this church. You can get out.” Multiple organizations have asked the IRS to investigate the 501(c)(3) status regarding this particular church.

Answer 3

Why not tax churches? That is a political decision of the US government, to support religion. A standard way for the government to promote something that it thinks is "Good" is to give it tax breaks.

Why tax churches which engage in partisan activities? Because then they are not acting as religious organisations, but as partisan organisations. This is to prevent groups with vague religious backgrounds from registering as "churches" and getting the tax benefits, without offering the supposed "Goodness" that churches do.

Answer 4

Well...

(IRS) Exemption Requirements - Political Organizations

A political organization subject to section 527 is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.

Exempt Function - Political Organization

The exempt function of a political organization is influencing or attempting to influence the selection, nomination, election or appointment of an individual to a federal, state, or local public office or office in a political organization. The election of Presidential or Vice-Presidential electors is also part of the exempt function of a political organization. Activities that directly or indirectly relate to or support an exempt function are exempt function activities.

So, why pick on churches for being political if there is specific category of tax exemptions for political organizations?

Further to that, would it not strike against First Amendment to suppress political communication, at least within a reasonable range? I.e. a pastor who spent all their time campaigning is not good, but one who voiced their opinion to their flock would be hard to object to. What about a pastor who campaigned very heavily for say the Democrats because of their theological beliefs about caring for the poor and the sick? What about, well might as well say it: abortion. I am firmly pro-choice but I understand entirely how many religious people object to it. They shouldn't dictate to others, true, but they can't have, political, opinion?

Last, and not directly legal, but rather political in consideration, this strikes me as a really divisive and pointless action. Things being what they are this type of measure would be highly partisan and would affect Republicans - surprise - much more than Democrats. For some strange reasons Christians in the USA believe themselves under attack by secularists despite being an unusually religious country by most rich Western metrics. This type of measure would give them more grounds than usual to complain. It would not pass and why stir this pot up?

i.e. Make no church tax exempt (not realistic politically, but I agree with the sentiment). Or leave them alone, at least for politics. Removing tax exemption for for-profit tele evangelist type outfits is a much more defensible action than policing religious political speech.

Answer 5

Well, the starting point of answering this question is the 1st Amendment. The 1st clause of the amendment is

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;

Now doing a google search on "why aren't churches taxed," the very 1st link that came was the LA Times article from 2008. The 3nd paragraph summarizes the SCOTUS decision which reaffirmed that making churches tax-exempt does not rise to the level of "respecting an establishment of religion":

In its 1970 opinion in Walz vs. Tax Commission of the City of New York, the high court stated that a tax exemption for churches “creates only a minimal and remote involvement between church and state and far less than taxation of churches. [An exemption] restricts the fiscal relationship between church and state, and tends to complement and reinforce the desired separation insulating each from the other.” The Supreme Court also said that “the power to tax involves the power to destroy.” Taxing churches breaks down the healthy separation of church and state and leads to the destruction of the free exercise of religion.

To sum up even more, because not taxing churches reduces commingling between political and church agendas. So the federal which creates this regime is consistent with the intent of the 1st Amendment.

The same article contains a counterpoint, which mentions that the tax exemption is codified in the federal law because it is not explicitly stated in the Constitution. And it is the federal law which creates the precondition that churches may not engage in "electioneering."

The boundary between what is and what isn't an appropriate separation of church and state has to be drawn somewhere. And that's where the law has drawn it.