That debate has brought another question to bear: Should churches and other religious organizations pay taxes? After all, mega-churches make mega-income, don’t they? Perhaps… but there are far fewer mega-churches than average-sized churches and most average-sized churches are struggling to make ends meet.
The National Congregations Study defines the average-sized church in the U.S. as having 75 regular participants in worship on Sunday mornings. This is important because these small churches will be hardest hit if tax-exempt status were to be repealed. The 2016 State-of-the-Plate survey of nearly 1,600 Christian pastors, leaders and lay members reflected flat or decreased giving for almost 6 in 10 ministries. Sadly, the all-too-familiar existence of economic hardship in our country has resulted in declining donations.
Assuming many average-sized churches would close if they were taxed, what would society really lose? The answer can be found in a 2016 study by Dr. Brian Grim of Georgetown University, and Melissa Grim of the Newseum Institute, who analyzed the economic impact of 344,000 religious congregations in the U.S. The study found the total economic contribution to be nearly $1.2 trillion per year, or around the size of the world’s 15th-largest economy.
The same study found that, despite prolonged economic hardship in many communities, the amount of money spent annually by religious congregations on social programs has tripled in the past 15 years. Some examples of the social issues addressed by congregations and religiously oriented charity groups include: alcohol and drug abuse recovery (130,000 programs); veteran and veterans’ families support (94,000 programs); prevention or support for people with HIV/AIDS (26,000 programs).
The funding for most churches comes from donations, which are tax-deductible. This tax deduction benefits the local economy by providing the people who attend with more money to spend locally. If churches and religious organizations were no longer tax-exempt, these local funds would be diverted to government use, rather than to local vendors and suppliers.
If the average church is taxed, we’ll lose social programs and funds that benefit our local communities. According to a Barna study, “The State of the Church 2016,” 55 percent of all Americans have attended a church service at least once in the past six months. For many of these attendees, church programs have literally been the answer to a prayer. How will these programs be replaced? Will the government furnish the types of socioeconomic programs churches currently provide? Our church-generated tax dollars would likely be used in less philanthropic ways. The needs of people should be a priority.
Across the country, we’re struggling with increased violence, homelessness, mental health issues and economic disparity. Churches of all denominations provide tools and programs that address these problems.
What about taxing the mega-churches? Will that really provide more revenues? Remember that taxable income is revenue minus expenditure. If we tax churches, they’re likely to do what other businesses do: increase expenditures in order to reduce taxable income. The minister’s million-dollar income will be an expense, as will the clothes worn for broadcasts, the jet used to travel to and from events, and the mailings and marketing campaigns that bring people in the door. In the end, there won’t be much, if any, income to tax and we will have sacrificed important social programs, volunteers, and the sincere and determined religious heart, dedicated to caring for “the least among us.”
Tax-exempt status allows churches to do more good than they could if they were paying taxes. Are all churches doing enough? No. But the majority are doing all they can; the loss outweighs the gain. Churches should remain tax-exempt, and separate from the government, but that’s another conversation!
— Dr. Ahriana Platten
After 20 years as an international market researcher, Rev. Dr. Ahriana Platten retired in order to serve as lead minister at Unity Spiritual Center, where she is best known for her interfaith activism and community service.