Tax-Exemption

TimeWatch Editorial
April 11, 2016

It is amazing how seemingly unrelated events can have a profound impact upon decisions that will affect every other aspect of life. The Supreme Court of the United States regarding the case

Obergefell Et Al. V. Hodges, Director, Ohio Department of Health, Et Al, reached a decision on June 26, 2015. Four states Michigan, Kentucky, Ohio, and Tennessee defined marriage as a union between one man and one woman.

14 same-sex cou­ples and two men whose same-sex partners are deceased, filed suits in Federal District Courts in their home States, claiming that re­spondent state officials violate the Fourteenth Amendment by deny­ing them the right to marry or to have marriages lawfully performedin another State given full recognition. Each District Court ruled in petitioners’ favor, but the Sixth Circuit consolidated the cases and reversed. However on the 26^th of June 2015, the Supreme Court ruled that Same-Sex Marriage is now a Right Nationwide. As recorded in the New York Times by Adam Liptak on June 26, 2015 in the article “Supreme Court ruled that Same-Sex Marriage is now a Right Nationwide.”

“No longer may this liberty be denied, No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice and family. In forming a marital union, two people become something greater than once they were.” The New York Times by Adam Liptak, “Supreme Court ruled that Same-Sex Marriage is now a Right Nationwide.”

Because of this ruling there are those who saw the impact it would have upon those whose religious convictions would not allow them to perform these ceremonies, thus:

“Sen. Mike Lee of Utah introduced the First Amendment Defense Act, which ensures that religious institutions won’t lose their tax exemptions if they don’t support same-sex marriage. Liberals tend to think Sen. Lee’s fears are unwarranted, and they can even point to Justice Anthony Kennedy’s opinion in Friday’s case, which promises “that religious organizations and persons will be given proper protection.” The Times, Mark Oppenheimer wrote an article entitled: “Now’s the Time to End Tax Exemptions for Religious Institutions.

The impact of this Supreme Court decision upon marriage, as controversial as it became was clearly expected. What was not expected was the impact it would have upon the status of the church. Given the fact that many religious leaders found the decision unacceptable, was in itself to be expected, however the resulting calls for a change in the actual status of those church institutions that did not go along with the decision was unanticipated. In the June 28 publication of The Times, Mark Oppenheimer wrote an article entitled: “Now’s the Time to End Tax Exemptions for Religious Institutions.” He says the following:

“The federal revenue acts of 1909, 1913, and 1917 exempted nonprofits from the corporate excise and income taxes at the same time that they allowed people to deduct charitable contributions from their incomes. In other words, they gave tax-free status to the income of, and to the income donated to, nonprofits. Since then, state and local laws nearly everywhere have exempted nonprofits from all, or most, property tax and state income tax. This system of tax exemptions and deductions took shape partly during World War I, when it was feared that the new income tax, with top rates as high as 77%, might choke off charitable giving. But whatever its intentions, today it’s a mess, for several reasons.” The Times, Mark Oppenheimer, Now’s the Time to End Tax Exemptions for Religious Institutions.

Mr. Oppenheimer suggests that the tax exempt status, or as he calls it the church subsidy is a totally bad idea that needs to be discontinued because:

“First, the religious exemption has forced the IRS to decide what’s a religion, and thus has entangled church and state in the worst way. Since the world’s great religion scholars can’t agree on what a religion is, it’s absurd to ask a bunch of accountants, no matter how well-meaning. You can read part of the IRS’s guidelines for what’s a bona fide religion here ; suffice it to say that it has an easier time saying what’s not a religion.” The Times, Mark Oppenheimer, Now’s the Time to End Tax Exemptions for Religious Institutions.

Mr. Oppenheimer is not the first to articulate this opinion, and he will certainly not be the last. As a matter of fact, you can anticipate an expansion of his ideas in the not too distant future. He continues:

“Many churches and synagogues sit on exceedingly valuable tracts of land (walk up and down Fifth Avenue to see what I mean). The property taxes they aren’t paying have to be drawn from business owners and private citizens — in a real sense, you and I are subsidizing Mormon temples, Muslims mosques, and Methodist churches.” The Times, Mark Oppenheimer, Now’s the Time to End Tax Exemptions for Religious Institutions.

But a careful examination of Mr. Oppenheimer’s article touches the true motivation of the effort. He is talking about the impact of same sex marriage upon the willingness of churches to refuse to perform such ceremonies. His final wish is expressed this way.

“The logic of gay-marriage rights could lead to a reexamination of conservative churches’ tax exemptions. But when that day comes, it will be long overdue. I can see keeping some exemptions; hospitals, in particular, are an indispensable, and noncontroversial, public good. And localities could always carve out sensible property-tax exceptions for nonprofits their communities need. But it’s time for most nonprofits, like those of us who faithfully cut checks to them, to pay their fair share.” The Times, Mark Oppenheimer, Now’s the Time to End Tax Exemptions for Religious Institutions.

Whether or not gay marriage is the motivating factor, the re-examination of the tax-exempt status is already on the way. We should be prepared for it.

Cameron A. Bowen