Book Review: ‘Taxing The Church’ By Edward Zelinsky – Forbes
When I told my covivant that the book I was reading was about taxing churches, CV’s comment was “Couldn’t that be like five pages?” In the introduction toÂ Taxing the Church:Religion Exemptions, Entanglement and the ConstitutionÂ (Oxford University Press), Professor Edward Zelinsky has a similar observations: “When I told a prominent judge that I was writing a book entitle Taxing the Church,Â the judge responded in a puzzled tone: “But churches are not taxed.”Â So part of the Professor Zelinsky’s mission is to show the various ways in which churches are taxed in some detail. Of course the subtitle “Religion, Exemptions, Entanglement, and the Constitution” gets more into the extended argument that is the heart of the book.
We can think about places and times when the relationship between church and state was different than it is in the United States today. In 16th Century Spain and 17th Century New England, there was a strong marriage. In the 19th Century United States, Protestantism and the state were good friends.Â The current situation in Germany where there is a substantial church tax, which can be avoided by renouncing your membership might be described as friends with benefits.Â The contemporary United States seems to be torn between the “wall of separation”, which is not actually in the Constitution, but read into it by the likes of the Freedom From Religion Foundation and the creeping religious right which will have high schools presenting the Flintstones as a documentary so that young earth creationism can get a fair hearing versus the theory of evolution.Â The real nature of the church state relationship, particularly in the area of taxation, is, well, “It’s complicated.”
Complicated As It Should Be
And Professor Zelinsky’s book is an extended argument that it needs to be complicated and much to the frustration of advocates and activists on both sides of the issue, the messy result that we have, while perhaps not as good as it can get, isn’t really that bad.Â Absolutists believe either that any exemption of churches from taxation represents a subsidy barred by the establishment clause or that tax exemption is always a reasonable, even required, accommodation to the constitutionally recognized autonomy of religious institutions. Absolutists will not like this book, which is why they really need to read it.
Not All Exemptions Are Subsidies
To argue that an exemption is a subsidy, there has to first be an agreement as to what the normative tax base is.Â The exemption from many but not all taxes for churches recognizes that the autonomy of religious institutions and actors is an important value recognized in the “free exercise” clause of the First Amendment.Â The wall of separation contemplated by Jefferson though is probably even more challenging than getting our neighbor to pay for a wall on our southern border.Â Insofar as possible, we want to avoid entanglement of church and state. And here is the most compelling argument that Professor Zelinsky makes.Â It is repeated a few times in different forms in the book, but it bears repeating.
Either taxing or exempting churches and other sectarian entities entangles church and state .In the tax context, there are no disentangling alternatives. Â Taxing churches results in enforcement entanglement as the tax collector collects revenue from religious taxpayers, often by intrusive means, and as taxpayers comply with their obligations to pay tax.Â Exempting churches causes borderline entanglement as churches and other sectarian actors claim the coverage of tax exemption while tax collectors and the courts police the boundaries of exemption and sometimes reject those claims.
The Empirical Section – How Churches Are Taxed And Exempted
The first four chapters of the book are the empirical section in which the author discusses the various ways in which churches are either taxed or exempted.Â The first chapter on the Constitution and Supreme Court decisions might be surprising.Â Over 150 years passed from the passage of the First Amendment till the Supreme Court had to face what tax implications the free exercise and establishment clause might have.Â Early case law indicated that in some instances a tax exemption might be required, while later decisions indicated that an exemption might be a permitted accommodation or not.Â There is a tendency to be more accepting of exemptions that also apply to secular institutions.
Chapter Two covers state constitutions which pretty universally exempt some, but not necessarily all, church land and buildings from taxation along with the property of other secular eleemosynary properties. (Eleemosynary is for the time being my favorite word).
Chapter Three covers the Internal Revenue Code and religious institutions.Â There are a host of issues – church exemption from income tax (along with other eleemosynary organizations), FICA, FUTA, UBIT, the charitable deduction (including the Scientology auditing decision), the parsonage exclusion, federal health mandates and church retirement plans.Â I suppose that is a lot and I should not be complaining, but I will anyway.Â It may be careless reading on my part, but there did not seem to be anything on 501(d) religious and apostolic organizations,Â a topic which I find pretty fascinating.Â Also nothing on corporation sole.Â These are probably side issues to Professor Zelinsky’s primary thesis.Â He also does not treat the vast array of phony churches and bogus theories that are a great source of color and amusement on this blog.Â I suppose it is like science text books leaving out young earth creationism, geocentrism and flat earth, topics you will also be exposed to if you spend time studying the tax mishegas of the likes of Kent Hovind.
Chapter Four covers state statutes.Â I found it slow going, but it illustrates well the diversity of practice among the states on issues of real estate taxation of ancillary structures and parsonages, unemployment tax, and sales and use tax.Â In this section Professor Zelinsky adopted a stylistic quirk, which some might find pleasant, but I found grating.Â After mentioning a state once or twice, he would refer to it by its nickname.Â This led to the sentence:
In contrast to the detailed statutes of the Nutmeg and Evergreen State, Delaware by statute simply exempts from taxation the property of “any church or religious society, and not held by way of investment”
The Inevitability Of Entanglement
Moving past the empirical section, Chapter Five “Untangling Entanglement” unpacks Professor Zelinsky’s argument on the inevitability of entanglement either from intrusive enforcement or policing a borderline.Â He lays out some principles showing that exemption can be the better answer when enforcement entanglement would be severe.Â The controversy in the area of the parsonage exclusion (Code Section 107) is a good example.Â Taxation of in-kind parsonage, due to the valuation issue, might be intrusive, whereas with the cash housing allowance, it is the borderline policing that is a greater concern.
Chapter Five is really the heart of the book and I think it might be permissible to lightly skim Chapter Four even at the risk of missing subtle points about unemployment insurance in the Buckeye State if the time saved is spent in close study of Chapter Five.
Current Areas Of Controversy
Chapter Six focuses on parsonages, parsonage allowances, and the religious exemptions form social security taxes.Â Â I have to say here that my friend Robert Baty, my most constant commenter and bane of the basketball ministers, will be disappointed that there is no discussion ofÂ Revenue Ruling 70-549, which allows the faculty and administration of, among others, Pepperdine University, to exclude part of their income as a housing allowance if they are members of the right religion.
Professor Zelinsky reveals himself a real New Yorker in this chapter with:
On the other hand, a parsonage can be a a unique, difficult-to-value structure.Â Think, for example, of the the archbishop’s home at St. Patrick’s Cathedral.
Somehow we know that he is not there mentioning St. Patrick’s Cathedral in Charlotte or Fort Worth.
Professor Zelinsky’s conclusion that both forms of the parsonage exclusion – in-kind and cash – are constitutional, but that the cash exclusion is poor tax policy probably won’t win him friends at either the Freedom From Religion Foundation or the Ethics and Religious Liberty Commission of the Southern Baptist Convention, but the nuanced view is an important one.Â Advocates on both sides of the religious exemption divide would be well served by reading this book and pondering its arguments.
Kind Of Pricey
Given that this book might be of great interest to many in religious organizations, details of its marketing are a little disappointing. On Amazon, the hardcover edition is $65 and the Kindle edition is $61.75.
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