Richard W. Garnett is the Paul J. Schierl/Fort Howard Corporation Professor of Law at the University of Notre Dame and founding director of the Notre Dame Program on Church, State & Society.
Instead of asking whether churches and religious organizations deserve to be tax-exempt, we should ask why governments should be able to tax them at all. Taxation, after all, involves interference by the state, and in a free society such interference needs to be justified.
The power to tax involves the power to destroy, as Daniel Webster argued in the Supreme Court nearly two centuries ago. While our government does have the right to levy taxes, it’s only because “We the People” have authorized it to do so — in order to raise the funds needed to provide for the common good. But should we give our government this “power to destroy” over churches and religious institutions?
A great deal of Supreme Court precedent — and popular opinion — has been shaped by Thomas Jefferson’s description of “a wall of separation between Church & State.” The saying is often misused and misunderstood: Church-state separation is not meant to create a religion-free civil society or public sphere. Instead, its purpose is to safeguard our fundamental right to religious freedom, by limiting the regulatory powers of government and by distinguishing between political and religious institutions.
As many have observed, there are plenty of good policy reasons for exempting faith-based homeless shelters, parochial schools, religious hospitals and so on from taxes on their income and property. Many of these reasons also apply forcefully to cultural, artistic and social welfare agencies of all kinds. But just as importantly, it is good to have a vibrant, diverse and competitive civil society to support rather than resist pluralism, to increase rather than shrink the opportunities for participation and engagement and to avoid government monopolization of too many activities. While there are things that probably only governments can do, there are many more things that non-state agencies can do just as well, if not better.
Many of the recent calls to tax churches rest on the premise that churches owe at least some of their resources to political authorities — to governments — who can decide whether or not to collect and use those resources for their own purposes. In this view, exempting churches from taxation is seen as somehow subsidizing religion. But it is a mistake to equate “not taxing” with “subsidizing,” even if in some sense the effect is the same. Governments do not refrain from taxing religious institutions merely because it is politically convenient or socially acceptable to support them. They do and should continue to refrain from taxing churches because their power over them is limited, because “church” and “state” are distinct and because religious freedom is fundamentally important.
Read more in this series: