Churches can and should take the lead in urging legislation that would end the tax exemption for themselves and all other non-profit organizations.  Without the hypocrisy and fear the present arrangement entails, our churches, and we, would then be free to carry out our Christian duty to bear witness, to store up our treasures in a place “where neither rust nor moth consumes, nor thieves break in and steal.”

One of life’s more pleasing fantasies is that we might tax credulity. Were that not just a figure of speech, if we could truly levy a modest tariff on gullibility, we could have long since paid off the national debt and plopped a chicken into every pot. Not that we would: that a modern democracy will voluntarily balance its budget and pay off its debt is another pleasing fantasy, itself a sure sign that there would be plentiful after-tax credulity.

Less pleasing is the notion that we would tax, not just credulity, but rather all belief – our churches, synagogues, and other religious congregations. (Hereinafter church will mean any religious organization.) That is no fantasy: it is very likely that many churches will face threats of taxation, certainly no later than the next national elections. As we shall see, among those most threatened will be those trying to hold what C.S. Lewis called “the enormous common ground” of “mere Christianity.”

But, the least pleasing of all the prospects is that we will not begin to tax our churches – and with them every other tax-exempt organization. In fact, unpalatable as taxation is, we should demand it.

This may not, granted, be readily apparent. But the alternatives to taxing churches and other nonprofits are both very likely and very bad indeed: that of all the currently tax-exempt organizations, only the churches will be taxed, or only the churches will be silenced. Or they will be silenced, then taxed. Therefore, to paraphrase the Abbé Arnaud Amalric: Tax them all, God knows his own.

Why would – no, is – this the best we can hope for? At present in the United States contributions to churches and other nonpartisan, nonprofit organizations are tax-deductible for those who contribute, and the groups themselves are exempt from income tax and often others as well, such as on sales and property. These exemptions from taxation depend on the IRS’s erratic interpretations of its arcane code, one portion of which requires that the tax-exempt groups remain politically nonpartisan. The tax laws of some other Western democracies, such as Canada, Venezuela, Australia, Sweden, Germany, Italy, and the UK, also in some way favor religion.

However, the strings – hawsers, really – attached to these exemptions can act as a strong and not always subtle form of control. (Other hawsers are RICO, so-called hate crime laws, and the McCain-Feingold amendments to electoral law; but these are quite different problems calling for quite different responses.) Already, during the 2004 election campaigns, one Roman Catholic diocese in the United States was threatened with legal action for simply reiterating the Church’s pro-life position, and the legal counsel for another urged, successfully, against the reading in Mass of a position statement from the National Conference of Catholic Bishops, hardly a hotbed of partisan political activity. Similarly, an official of Canada’s Custom and Revenue Agency asked the Bishop of Calgary to withdraw a pastoral letter in which the bishop criticized politicians who do not uphold church teachings in their official duties.

The isolated threats of 2004 will be common by 2008 because they can succeed, as in the diocese already mentioned, and nothing succeeds like excess. There are several reasons  such threats can cow a church. First, the threats in 2004 were hardly a secret, and no conspiracy will be needed in future elections to provoke a flurry of lawsuits and complaints to the IRS. (However, just to be on the safe side, the interested parties will conspire to churn the flurry into a blizzard, as with the curiously similar school funding and Social Security disability lawsuits of the 1990’s.) By their sheer volume, the resultant suits and complaints can bankrupt – or silence – a denomination or large diocese, let alone an individual church or organization.

That a church may be readily silenced is especially true now that a Federal court in Portland has ruled that the plaintiffs in a suit against a Catholic diocese can also go after the assets of its individual parishes and schools. Armed with this precedent of spreading responsibility downward – and within an organization like the Catholic Church that is famously not democratic! – the plaintiffs can go after as well the assets of every member of an offending church. And will do so, once it occurs to them. (Graves’ Iron Law of Torts: liability is a function of assets.)  

Second, the lawsuits and complaints will be not only legally permissible but legal actions. We have gone from believing that the moral helps define the legal to believing that the legal totally defines the moral. Therefore, the legalistic cloak given to these threats will allow those who issue them – even as they win elections and collect triple damages – to persuade others, and perhaps themselves, that their complaints are public-spirited, high-minded, and any number of other hyphenated phrases.

Third, bases for complaints can be broad and vague, even bizarre, and therefore plausible ones will be easy to conjure up. The most common basis is that the implication of a religious teaching or pronouncement is in some way politically partisan, as in the instances already cited. (Consider: if the Weather Channel predicts thunderstorms for the afternoon of an outdoor political rally, is it being partisan?) Since most religions deal in first causes and universal precepts, their tenets necessarily will have implications in great issues such as abortion, the preferential option for the poor, war or peace, and life or death, that the society has reduced to the political or merely legal. Of course, if a political faction agrees with those implications, it will not consider the religion espousing them to be indulging in partisan political activity.

There seems no limit to this strained, if selective, reaction to the implications of a religious precept. For example, Robert Frakes, a Clarion University historian, wondered on H-Net whether, if the drive to “ban… homosexual marriage ultimately derives from the Hebrew Bible, and its acceptance as religious truth by Christians, would not laws banning homosexual marriage be thus derived from religion? If so, such new legislation may well be an attempt to break down the ‘Wall of Separation’ between Church and State that Thomas Jefferson described as an integral aspect of American government.”

Of course, there is no drive to “ban” homosexual marriage; it is the attempt to forestall its imposition by judicial fiat. But give Frakes some credit: at least he did not couple what Jefferson said with any form of the word constitution. Though Frakes did not say so, “wall of separation” appears only in a letter Jefferson wrote to the Danbury Baptist Association. Furthermore, in both the unedited and the final version of that letter Jefferson said nothing about any “integral aspect of American government”; he wrote instead about the limits of civil government and the “rights of conscience.” Frakes turns Jefferson’s letter on its head to imply that faith can never inform the voter or the legislator. It is a good thing for Frakes, a specialist in Roman, not American, law, that he is in a line of work where narrow, tendentious research is acceptable.

In the October 2005 issue of Touchstone magazine, Anthony Esolen gave a concrete and more ominous example: the Canadian Supreme Court ruled that a school district’s decision to forbid certain books was unconstitutional because some of the books’ opponents expressed themselves in religious language. The Canadian Court’s reasoning, if we may so dignify it, would rule out of bounds any implication arising from religious beliefs. But not to worry: in subsequent cases the Court need not follow its own reasoning. Instead, it will behave just like any other political faction and ignore or decry religious belief depending on the issue.

At the other, the business end of the syllogism, any implication of non-religious research that tends to support religious faith suffices to raise doubt about the validity of that research. Intelligent design is a good example of this prejudice, especially among those whose knowledge of evolution begins and ends with once having watched Inherit the Wind. (Pop evolution may be like pop psychology: practically speaking, the only kind.)

It does no good to point out that on many significant issues, such as charity, abortion, peace, and marriage, the churches were there first, and it is implications of later secular beliefs that are intruding. The modernist mindset is ahistorical and allows religious belief as neither premise nor conclusion.

The fourth, and chief, reason for the vulnerability of the churches in these countries is this: they have little experience with being taxed and no recent experience at resisting overreaching governments. Worse, some derive all or nearly all of their income from taxes – as examples, tax-supported churches in Germany and at least one major Catholic charity in the United States. These churches simply have not budgeted, fiscally or mentally, for being taxed, for not being supported by the government. Any threat of any change for the worse in their financial situation is a very strong form of control, indeed. Faced with the threat of taxation or the loss of all their income, too many churches will lawyer up and take the 5th instead of the 1st.

Nor can churches rely on the law. The principal Supreme Court decision that limits their taxation, Murdoch v. Pennsylvania, is barely sixty years old, and there is ample precedent for courts’ shrugging off inconvenient precedent (along with law, morality, common sense, popular will, and clear Constitutional language). Sooner or later, religious organizations must render unto Caesar, with either money or passivity.

Often (mis)quoted from Murdoch is: “The power to tax the exercise of a privilege is the power to control or suppress its enjoyment.” This is misleading: taxation, broadly applied, is not so influential as bureaucratic, political, and judicial discretion over taxation of churches and other nonprofit organizations. This arbitrary selectivity is, of course, what now exists.

This enormous potential for control is control: churches remain silent when they should not, or speak out and are punished when they should not be. This dependence on official whim is a threat to every member of every denomination, whether they think of themselves as conservatives, liberals, or as anything in between. Suits and complaints against religious groups will be judged by those, like the Canadian tax official, whose job depends on the very politicians being criticized. This bias is not limited to politicians and bureaucrats: the same legal counsel who urged that his diocese not read the position statement of his own church’s bishops also is active in local partisan politics.

Everyone with religious beliefs should be afraid. Very afraid.

Churches and religious organizations are, after all, only a minority of the tax-exempt organizations in the United States. California alone has 143,043, from the 1 2 3 Christian Mission through the Lamorinda Water Polo, Inc. to the unpronounceable ZZYZ% Foundation. They are schools, unions, social clubs, think tanks, charities, political parties, lobbies, foundations, an unheavenly host of quasi-semi-demi-kinda-sorta governmental organizations, and of course governments themselves. (Governments are much like other nonprofits, except that they have guns and an especially clueless sanctimony.) Per the IRS, they are all “nonpartisan” and therefore tax-exempt.

As I wrote last year in “These Verbal Class Distinctions,” nonpartisan is a condition lasting “… just long enough to garner tax-exempt status for an organization, which it will thereafter use to lobby to keep it. Nonpartisan organizations often share office space, staff, name, and ideology with their openly partisan brethren: a distinction without a difference, a hair only the IRS could split. Both are usually another IRS invention, the nonprofit organization.”

The only true nonprofit organization is one with no paid staff. And maybe not even then: such organizations scratch each other’s back and grease each other’s palm, by swapping money and influence among themselves, through contracts, consultants, conferences, and other cons. For example, in the March 2006 Touchstone Mark Tooley revealed that the National Council of Churches is now supported more by liberal foundations than by its member churches, and that most of its grant money goes for political activity. Trying to follow the money through these organizations is like tracing the course of a stream through a swamp: you know where it goes in and where it comes out, but in between all you know for certain is that it gives off a distinct odor.

Furthermore, one way of keeping the non in nonprofit appears to be to inflate executive salaries, which has led in the United States to an IRS initiative to curb such abuses. This will fail. These tax-exempt nonprofit organizations are often wealthy and powerful – the Ford Foundation is more influential than the Ford Motor Company – and therefore so are their executives. In practice, power and influence differ only in that power is sometimes held accountable, while influence never is. Lord Acton had it wrong: it is lack of accountability, not power, that tends to corrupt.

Worse, for their officials there is a revolving door between governments and the secular nonprofit organizations. This has helped create an incestuous, back-scratching, palm-greasing network of moral and intellectual corruption far more dangerous than the military-industrial complex about which Eisenhower warned. Perhaps some future outgoing president will warn of the dangers of the nonprofit-government complex. (Of course, if he did so, where would he then find work? Answer: everywhere. Nonprofits would compete to hire him to show that they are not dangerous.)

Too, we recognize that politicians, certain celebrities, and influential organizations will almost certainly never face an IRS audit or a challenge to their tax exemptions. Even if they do, Federal agencies such as IRS and the Social Security Administration have special units and procedures for dealing with them. The privileged are different from the rest of us. Yes, they have more privileges.

The problem is international: non-governmental organizations, or NGO’s, reliably align themselves with the secular Left to promote abortion, among other things, and the quasi-semi-demi-kinda-sorta governmental organizations are so burdensome in some countries, like the UK, as to earn a derisive nickname: quangos. (I strongly urge that we adopt it.) Taken together with those in foreign countries, these tax-exempt groups are an overground economy that mirrors the more familiar underground economy, which is also tax-exempt. One relies on pimps, thieves, pushers, prostitutes, and extortionists, and the other on lobbyists, consultants, fund managers, executive directors, and development coordinators. (Which is which, and which better supplies a social need, I shall leave to the reader’s judgment.)

In general, secular tax-exempt organizations do not face the political, bureaucratic, and media pressure that churches do, and not just because of the secular organizations’ wealth and connections or the modernist mindset. The basis for the exemption for secular organizations is that they are alleged to be fulfilling some vital social need – even if only a narrow advocacy of a view peculiar to only one political party – that otherwise the government would have to do. For example, thanks to the Lamorinda Water Polo, Inc. there is no Federal Water Polo Commission or Office of Water Polo Affairs tucked away in the district of some powerful congressman. Well, probably not.

On the other hand, the bases for the churches are the 1st Amendment and precedents like Murdoch. Ironically, these stout pedestals cause churches, burdened as they are with first causes and universal precepts, to be singled out for special scrutiny that the seculars are not. Within the churches, those groups most foreign to the modernists – as examples, evangelicals, Christian pacifists, and traditional Catholics – will be given the shortest of shrifts. And, as I remarked in that earlier essay, “Moslems will know that their moment has passed, that they have, as it were, arrived in American popular culture, when it shifts from indulging Islam to despising it like any other religion.” Then, to remain a tax-exempt nonprofit, the Moslems must become nonProphet, as well.

Under our present system, if the churches want free speech, they must pay for it. And if a church forgets why it has existed for hundreds or thousands of years and allows itself to be bullied into silence, generally or selectively, then questions of war and peace, treatment of the poor and defenseless, and of life and death will be left to timid churches and secular nonprofits – the scared and the profane. This would push Christianity further into the margins, leaving not mere but near-Christianity, what C.S. Lewis called an “insipid interdenominational transparency.”

It is politically impossible that any decade soon churches will be free from both taxation and censorship; instead, they will more often need to choose one and only one. Churches can do little about the modernist mindset and even less about the self-interest and hypocrisy of others: people have always sought wealth without accounting and power without accountability. But churches can do something about their own behavior: they can and should choose the freedom to speak up, to bear witness. They can and should take the lead in urging legislation that would end the tax exemption for themselves and all other organizations.

Furthermore, deductions to such organizations should no longer be deductible: otherwise, the wealthy could set up nonprofit front groups to collect donations and carry out their agenda, as was done last year by those supporting California’s Proposition 71. (After Prop 71 passed, the tax-supported organization it created promptly moved to reimburse the front groups for their electioneering expenses! And it is not impossible that these fronts were funded by, among other people, the head of that new organization.)

Ending the tax exemption and deductibility is, of course, merely a preemptive first strike to head off the alternative, that only churches would be taxed or silenced. But that grim alternative would be – will be – far worse. As Benjamin Franklin might have put it, we must all be taxed together, or, most assuredly, we shall all be taxed separately.

How churches and nonprofits might be taxed is best left to the considerable, if opposing, ingenuities of their comptrollers and the governments; churches in the UK, for example, are subject to a value-added tax. Churches and other nonprofits have to buy much the same things as any other organization, so the need for taxing such groups may be one more reason for increased reliance on a sales, rather than an income tax.

It would help if that revolving door between the nonprofits and governments is slammed shut, making both subject to the same rules as the Department of Defense and its contractors. Too, governments should stop willy-nilly supporting the nonprofits with grants. If, repeat, if a nonprofit is truly able to fulfill some vital social need, it can bid for the contract just like any other business.

This is not to say that for-profit corporations are necessarily better than nonprofits. After all, a year or so ago a corporation was caught selling its real estate to its top executives for bargain-basement prices. Its response was forthright: it hired a well-connected PR firm. Ho hum. As it happens, the corporation was a major nonprofit conservation group and the real estate was land donated to it for wildlife preserves. Tolstoy once wrote that happy families are happy in the same way, while unhappy ones are unhappy in different ways. Not so with organizations: the unhappy ones, and they are legion, are all much alike. Day to day, their employees do not know, or care, whether the organization is showing a profit (or a nonprofit). So it is to say that, as organizations, churches and other nonprofits have, alas, the same vulnerability to corruption, disaffection, inefficiency, and creative accounting as do for-profits and even governments.

Taxing the churches and nonprofits has several benefits. By far the least is the disappearance of one class of tax-shelter scams. No matter: others will arise to replace them. Nor will the additional revenues help balance any budgets; as I noted at the outset, this is a pleasing fantasy that, like the horizon, always recedes.

Far more important, it will put the churches on the same footing as other nonprofits, such as the giant foundations, and all the non-profits on same footing as for-profits. There will be no concerns about whether an activity is partisan and political; for example, a nonprofit, nonpartisan, tax-exempt organization could fearlessly accuse a major political party of appealing to the dark underside of American culture, to that minority of Americans who reject democracy and equality. (No, wait, bad example. One did just that, in 2004, with no loss of its exemption.) Nor any hypocrisy: to pay for their pet projects, nonprofit lobbies can no longer urge taxation for everyone else. If a group wants to, say, prop up a congenial regime, bring down a noxious one, protect its holy sites, found a Peace Academy, invade Freedonia, defend Amirstan, bail out some corporation, or forgive debts owed someone else – then it should help pay for what it wants.

This latter is true for churches, too. All too often, the subtext of the pleas for the preferential option for the poor is not for private donations, but rather for government action to tax and disburse: Christian charity at gunpoint. A church’s cry for charity and social justice rings hollow when it holds itself exempt from that which pays for most of the justice: taxation. Here, then, is an opportunity for churches to do what, in their role as worldly organizations, they are better able to do than any secular group: demonstrate moral leadership.

Of course, the obvious and most important benefit is that governments could no longer rent the silence of churches. Without the hypocrisy and fear the present arrangement entails, our churches, and we, would then be free to carry out our Christian duty to bear witness, to store up our treasures in a place “where neither rust nor moth consumes, nor thieves break in and steal.”

In one of Scott Adams’ Dilbert cartoons, its most cynical and perceptive character decides he will start a “discount religion” that would request a “tithe” of only 5% and let people sin as much as they wanted. But the “only problem,” he concludes, is that he would not to want “to spend time with anyone who would join that sort of religion.”

The question is, do we want to spend time with anyone, let alone be anyone, who would join that sort of “insipid interdenominational transparency?”