Taxes: Should the Church Pay?

    I regularly hear from folks who think that the church should pay taxes.  Despite the fact that the church is not exempt from all taxes (only property taxes and some sales taxes), the theory is that by removing churches’ tax exemption, local, state and federal government would receive an enormous increase in revenue.  But is that true?  My best answer is maybe, but probably not. Here’s why:

1)      Many churches are operating at the edge of solvency.  It’s sad, but it’s no secret that most churches were built before the long decline in attendance that we have seen for the last several decades.  In our denomination, probably ten to twenty percent of our churches are struggling financially.  Many of these small churches have a budget that is barely enough to pay the pastor and keep the lights on and yet occupy relatively large buildings.  If these churches were told they had to pay an additional $5,000 to $10,000 per year in property taxes, they would simply lock the doors and go home.

2)      Church income is a moving target (Part 1).  In every church that I have served, we have had members who objected to our church sending money somewhere.  Either they objected to sending money to overseas missions, or they objected to sending money to support the expenses of our district or conference offices, or they objected to paying to support denominational missionaries, or any number of other things.  In many cases, these folks either withheld their gifts, or found ways to give gifts directly to the projects that they did support.  If the church were subject to taxation, I have no doubt that a great deal of what appears to be “church income” would suddenly vanish.

3)      Churches are a moving target.  While my denomination (The United Methodist Church) has just under 800 churches in our East Ohio Conference, the majority of them are quite small.  I don’t recall the exact figures but something like 60 percent of our churches have 40 or less in attendance.  Nationally, half of all churches have 75 or less, and close to 70 to 80 percent have 100 or less.  Those who favor taxing churches may not appreciate that churches are not like other “businesses.”  While finding space for 100 people would be harder, finding room for forty (or twenty) would be easy.  If these small churches were required to pay property taxes, a great many of them would simply abandon their buildings and meet in one another’s homes instead.

4)      Church income is a moving target (Part 2).  In my grandparents’ church, in order for the pastor to be paid, those in attendance had to specify that a part of their offering was to go to him (or her).  If the offering was small, so was the pastor’s paycheck.  In reality, this idea could be applied to almost everything in the church.  The church exists as a corporation as a matter of convenience.  It’s just easier for us to make a single donation to the church and have the treasurer pay the electric bill and the pastor’s salary, and all the other bills.  But we don’t have to do it that way.  If the church were taxed on the donations that it received, it wouldn’t take very long for most churches to make a different plan.  Pastors are already considered to be self-employed by the IRS so it would make little difference if church members paid them directly instead of through the church account.  Almost overnight, church “income” could go to zero.  The hardest things to figure out would be the utility bills and the tax bills, which, as I already noted, would go away if the church decided to walk away from their buildings.

5)      Taxing churches would increase suffering.  When churches are doing what they are supposed to be doing (and admittedly, not all of them are), the benefits that they provide to the community may be more than any taxes that they would pay.  Each church typically supports many other organizations, food pantries, homeless and battered women’s shelters, clothes closets, health clinics, prenatal care centers, others in poorer parts of the country such as Appalachia, Indian reservations, and the inner city, as well as giving generously toward the victims of natural disasters.  Because this giving is not a fixed cost (like taxes) but comes from a church’s discretionary budget, any increase in taxes will necessarily take away funds that otherwise would have been given to these sorts of projects.  And remember that taxes can’t be used to replace the funds lost by these organizations, because most of them are run by churches.

    Overall, I just don’t see much benefit to the community from removing the tax exemption from local churches.  It would hurt the poorest among us and in the end I don’t think it would generate that much money.

 (Next: Taxing Churches Might Be Good)

Are You Afraid?

Are you afraid?   

    Every day we open the newspaper or we turn on the radio or the television and we hear bad news.  Our economy is not in great shape.  Our government is spending more than it can afford.  Unemployment is at near historic levels and showing no sign of getting better soon.  We hear reports of doom and gloom almost constantly. 

How has this constant barrage of bad news affected you?

    As I have been reading reports from churches and other charities across the country the reports seem to share a common thread.  Fear.  After listening to the constant cries of disaster and doom people begin to grow afraid for their future.  When people are afraid, they begin to act in ways that reflect their fear.  When we are afraid, we become far more conservative financially, our worries for the future cause us to spend less, pay down credit cards and even save a little more in the bank.  When we are afraid, sometimes without even being consciously aware of it, we pull back and prepare for a rainy day; we are, as a society, waiting for the other shoe to drop.  This mentality is widespread.  The stock markets react violently to even the tiniest piece of bad news and only hesitantly move forward when there is good news.  Retail sales and other measures of consumer spending are not especially good at least partially because people are not confident of how things will be next month, or next year.  People are afraid.

The funny thing is that most of us have no real reason to be afraid.  

    Most of us have the same jobs that we had last year and the year before that.  Many of us have continued to get the same sorts of raises that we have always gotten.  Except for what we seem to be spending on gasoline, our expenses are not significantly changed from what we have been accustomed to for a long time.  Obviously there are exceptions.  One of my brothers has been out of work for more than two years and he is not alone.  Many folks are hurting.  The rest of us however, are living pretty much the same lives that we were living before the recession began several years ago.  For us, our fear has little or no basis in reality.  We are afraid, only because the evening news seems to tell us that we should be and something about that is not right.  

Why should we act as if we are afraid if we have no real reason to actually be afraid?

    As Christians we have another, even better, reason to resist this kind of fear.  Our fear seems to come from our worries about what the President or the Congress will or will not do.  Our fear seems to come from our worries about the economy and other things far outside out control or understanding.  Instead of allowing these worrisome times to make us afraid, we should remember who is in control.  Psalm 20:7 reminds us that “Some trust in chariots and some in horses, but we trust in the name of the LORD our God.”  And if we even momentarily considered putting our trust in our bank accounts or in our government, Job is there to remind us that “What they trust in is fragile what they rely on is a spider’s web.  They lean on the web, but it gives way; they cling to it, but it does not hold.”  Nahum 1:7 tells us that “The LORD is good, a refuge in times of trouble. He cares for those who trust in him.”  Just because we are people of faith, does not mean that we are immune to fear, but the when fear springs up inside of us we remember this: “When I am afraid, I put my trust in you.  In God, whose word I praise, in God I trust and am not afraid.  What can mere mortals do to me?” (Psalm 56:3-4)

    As followers of Jesus Christ we are called to put our trust in him and not in the fluctuations of economies and governments that we cannot control.  All of these things are under his command and it is our job to trust in him.  Daniel was literally thrown to the lions but we should remember that “when Daniel was lifted from the den, no wound was found on him, because he had trusted in his God.” (Daniel 6:23) 

    We hear bad news every day and honestly, I have begun to listen to the news less often because of it.  I am not hiding from the truth, but I don’t need to be constantly beaten with it either.  I hope that you will remember that we have no need to fear.  Whenever we are tempted to be afraid, we need to ask ourselves a single important question…

Who do you trust?