Special status for religious groups creates unfair tax system
In Italy on Wednesday, Prime Minister Mario Monti announced his plan to amend Italian law to allow taxation of the Italian Church. Like the United States, Italy has been facing a recession for some time now and has been examining all the options to make up for the shortfall. An investigatory committee found a gain of €100 million ($130 million) by adding only a property tax on all church commercial property. A similar move in the U.S. could place much-needed funds back into our government budget.
Right now, churches, clergymen and their relatives benefit immensely from laws that place them outside the reach of normal nonprofit organizations in a variety of ways. The most forward and simple inequality that should be taken into consideration is to remove or cap the parsonage allowance. Today, every cent that an ordained clergy member receives from the Church for his or her home is tax-exempt, including insurance, property tax, utilities, mortgage and even the interest on the mortgage. The U.S. military provides a tax-free housing allowance up to a certain point, beyond which taxation is fair game.
This exemption does not exist for workers of standard nonprofit organizations, who must pay normal federal taxes on these properties. These exemptions often exceed millions of dollars; Ed Young Jr., the CEO of Fellowship Church in Grapevine, Texas, resides in a 10,000 square foot home valued at $1.5 million and oversees a $53 million dollar annual tax-free budget.
Pastors, while paying no income tax, may also opt out of Social Security and Medicare taxation as well. A 2010 study found that the average megachurch pastor’s salary was $147,000, going as high as $400,000 — all tax-free. Taxing religious employees, who work just like any other American, would provide a significant increase in the internal revenue.
Churches are automatically exempt from filing financial statements about the income they receive or distribute and pay no property tax on any property holdings they may have. And these tax exemptions are not just for mainline religions; in October 1993, the Church of Scientology received tax exemption as a religion in the U.S.; their “clergy” receive the same benefits as a small-town church. The U.S.’s position is somewhat contrasted with France’s, which recently declared Scientology a fraudulent cult and has begun assessing fines for “targeting vulnerable people for commercial gain.”
By enforcing taxes on the industry that is organized religion, our country could gain significant sums of money, estimated in the billions of dollars, by simply treating all our citizens with equality. Religion has become a lucrative industry, a far cry from the modesty of pastors of the past. In light of changing times, the billions of tax-free dollars that religion freely enjoys should be reexamined. When pastors travel in private jets to their million-dollar, tax-free mansions, it is time to reevaluate the tax-free status of churches.