Isaac Backus, a Baptist minister from Massachusetts and early advocate for religious liberty, said this about a proposed tax to support a state church: “It’s not the pence [money], but the power, that alarms us.”
This quote nicely sums up my concerns about presidential hopeful Beto O’ Rourke’s recent statement that he plans to remove the tax-exempt status of religious organizations—including churches, mosques and synagogues—that oppose same-sex unions. Candidates Pete Buttigieg, Elizabeth Warren and even O’Rourke have walked this position back to some degree, but O’Rourke’s statement and the loud applause it received set off alarm bells around the religious community.
Since tax-exempt status is now in the headlines and, apparently, in the crosshairs, how should ministry leaders and other committed Christians think about this and explain the importance of tax exemption to their friends and neighbors? Here are four key reminders.
#1 Tax Exemption Strengthens the Institutional Separation of Church and State
In a 1970 case captioned Walz v. Tax Commission of the City of New York, the U.S. Supreme Court held 7-1 that tax exemption for churches “creates only a minimal and remote involvement between church and state and far less than taxation of churches.” The Court also famously held that “the power to tax involves the power to destroy.” Stated differently, a government that can tax the church can use that power to coerce the church and to abridge the free exercise of religion. In fact, this appears to be exactly what Mr. O’Rourke is proposing—imposing financial penalties on religious institutions that do not agree with the government’s view on marriage. When the state tells the church what it can and cannot believe via the power of taxation, the First Amendment is in grave peril.
#2 Tax Exemption is Not (under Current Law) a Constitutional Right
According to Bob Jones University v. United States (I always do an involuntary face palm when citing this case because of the explicit racial bias defended by BJU), a religious organization’s tax exemption can be revoked if it violates “fundamental national public policy.” In Bob Jones, the Supreme Court upheld the revocation of the university’s tax-exempt status because it prohibited interracial dating and marriage. You can probably guess where this is going. This case raises the question: “if a religious organization’s tax-exempt status can be revoked over racial discrimination, can the same standard be applied to a religious organization that opposes same-sex marriage?” Many pastors that I speak to assume that tax exemption is a right firmly secured by the First Amendment, but current law states otherwise.
#3 Tax Exemption Reflects the Church’s Community Impact
The 16th Amendment, which was ratified in 1913, gave the federal government the right to impose an income tax. When the top tax rates were increased shortly thereafter to assist with the financial burden of World War I, tax exemptions were developed to ensure that charitable funds did not dry up. In sum, tax exemptions were granted because of the “beneficial and stabilizing influence in community life” (a quote from the Bob Jones University case) provided by churches and other charities. So, what’s the best response to Mr. O’ Rourke? As I often say, the best way to defend religious freedom is to use it. The best argument for continued tax exemption for churches is for churches to get outside their walls and make a difference in their communities. One Georgetown University study found that the economic impact of religion in the U.S. is approximately $1.2 trillion, so let’s focus on and increase that number.
#4 Tax Exemption Highlights the Real Issue
This flare-up is not really about tax exemption. Rather, it is about the continuing clash between LGBTQ rights and religious freedom. The advocates of the sexual revolution routinely paint religious individuals and organizations that hold to a Biblical sexual ethic as bigoted and hateful. And, Mr. O’Rourke (who deserves credit for his intellectual honesty) is just acting on that belief. Stated differently, this conflict over tax exemption just highlights the natural logical and legal conclusions of that sharp rhetoric.
Here’s the problem: that rhetoric is not factually accurate. As Andrew Walker says, “Billy Graham is not the new Jim Crow.” Religious individuals and institutions that hold to a Biblical sexual ethic are not the modern cronies of slave or lunch counter owners in the deep South. Why? This country has a 300-year history of slavery and systemic racial discrimination, fought a civil war over race, instituted racial segregation as a government policy and withheld basic civil rights from minorities until a little over fifty years ago. A church preaching or teaching about Biblical marriage in a culture that has largely embraced the sexual revolution is so far from implementing a society-wide, systemic discrimination that the comparison is almost laughable.
Please note that I have every sympathy for individuals that identify as LGBTQ that have been treated with disrespect or harassed. My point here is not to disparage them or downplay their experiences. Rather, it is to point out a factual differences between historic, government-sanctioned racial discrimination and religious organizations preaching and teaching the Biblical sexual ethic .
It is important to note that this distinction between racial discrimination and religious individuals that oppose same-sex marriage is already reflected to some degree in federal and state law. Justice Kennedy, writing in Obergefell v. Hodges (the same-sex marriage case), stated “[m]any who deem same-sex marriage to be wrong reach that conclusion based on decent and honorable religious or philosophical premises, and neither they nor their beliefs are disparaged here.” Further, all fifty states bar discrimination based on race without exemptions for religious institutions; but, all twenty-three states that bar discrimination based on sexual orientation and gender identity include some form of exemption for religious organizations. Once again, Billy Graham is not the new Jim Crow.
In conclusion, the loss of tax exemption would take a terrible financial toll on the religious community and on society in general. But, that is not my greatest concern. A state that has the power to tax the church has the power to destroy the institutional separation between the two. Stated differently, “it’s not the pence, but the power” that should alarm us.