What effect will tax reform have upon local congregations, denominations, and religious organizations?
The Tax Reform Act of 1969, passed by both houses of Congress on December 22, contains a number of provisions which have a direct bearing upon income for religious causes. President Nixon signed the bill into law on December 30.
The bill’s possible impact upon the churches was considered to be especially significant now that some religious groups are reporting significant declines in income. Here is a rundown on specifics in the tax reform measure as they relate to charitable giving and as they were finally agreed upon in the conference report which Congress approved:
On the broad scale, individuals, including contributors to churches, get more take-home pay. The 10 per cent income tax surcharge was to be reduced to 5 per cent as of January 1 and eliminated by July.
People willing and able to give substantial sums to charitable causes get more incentive to do so with the raising of the ceiling for regular charitable deductions from 30 to 50 per cent. A special unlimited charitable deduction, however, is phased out.
Religious groups that get financial help from foundations may be affected somewhat adversely because foundations now for the first time are called to pay a 4 per cent tax on investment income. This may be offset to a degree by a new provision that requires foundations to pay out to charity at least 6 per cent of their net worth each year.
One highly-controversial tax loophole is closed in the imposition of the 48 per cent corporation tax upon most businesses operated by churches. A number of churches have been borrowing money to buy businesses, then leasing them back to their original owners who no longer had to pay income tax because they now belonged to “non-profit corporations.”1Officially, a law went into effect January 1 in California which requires some church businesses to pay state corporation taxes. Under the revision, if such businesses carried on operations prior to May 27, 1969, they will not have to begin paying the tax until 1976.
One major exception was specifically written in for radio and television stations. The language excepts trades or businesses which consist “of providing services under license issued by a Federal regulatory agency, which is carried on by a religious order or by an educational institution … maintained by such religious order, and which was so carried on before May 27, 1959 [sic], and less than 10 per cent of the net income of which for each taxable year is used for activities which are not related to the purpose constituting the basis for the religious order’s exemption.”
Tax-exempt groups are given rules on the acquisition of income-producing property. In general, the property must be “in the neighborhood of other property owned by the organization” and the organization must intend to use the property for its tax-exempt purpose within ten years. The income for that ten years, however, is tax free.
In this connection, there is a special rule for “a church or convention or association of churches.” These are given fifteen tax-free years and are not subject to the neighborhood test.
The measure provides that the books of church groups may be examined by the government if there is reason to suspect unrelated business income.
DAVID E. KUCHARSKY
High Court Weighs Church Tax Exemptions
This could be the year that the U. S. Supreme Court throws the entire American religious establishment into a financial tizzy.
The court is now preparing a decision on a case brought by Frederick Walz, a recluse New York lawyer who is challenging the legality of the tax exemption granted all church-owned property. The case was argued before the court on November 19. Announcement of the outcome could come anytime between now and next summer.
Baptist Press newsman W. Barry Garrett said, “If Walz wins, and if the court decides that tax exemption of church property is unconstitutional, both the church and the government will be in trouble. Many churches will be able to pay their taxes, but others will not be able to meet the bill. Government will face the problem of disposition of church property if the taxes are not paid.”
A decision for Walz would probably mean the biggest windfall in public revenue in American history. Churches in the United States now own an estimated $102 billion worth of lands and buildings. If and when these are assessessed, the resultant income could indeed spell tax relief at the local and state levels. There would undoubtedly be immediate demands in Congress, however, for a constitutional amendment to override the court decision (and chances are it would eventually be adopted).
Eleven amicus curiae (friend of the court) briefs were filed in the case, known as Walz v. Tax Commission of the City of New York. Only one, submitted by Madalyn Murray O’Hair, supported Walz. Those aligned against him included the U. S. Catholic Conference, the National Council of Churches, the Episcopal Diocese of New York, the National Jewish Commission on Law and Public Affairs, the Synagogue Council of America, the Baptist Joint Committee on Public Affairs, the Baptist General Convention of Texas, Americans United, and the attorneys general of thirty-seven states.
The Baptist Joint Committee argued that constitutionally guaranteed religious liberty “requires, by right, the freedom from taxation of property used for religious purposes.”
Americans United contended that the “free exercise” clause of the First Amendment does not make mandatory the exemption of houses of worship from tax, but concluded that such tax exemption does not constitute an “establishment of religion.”
The Rev. Dean Kelley, NCC spokesman, testified that “houses for the assembly of people to worship and to hear the Gospel of their religious faith arc essential to the free exercise of the religious belief of all the principal religious communions.… For the state to tax such religious houses and the ground which furnishes their foundation is in essence to tax the religion of which they are an essential part and evangelistic expression and exercise.…”
The Synagogue Council of America pointed out that the First Amendment prohibits the state from supporting churches and churches from financing the state.
The U. S. Catholic Conference argued that taxing churches would “substantially impair the flourishing of religious liberty in the United States.”
The case involves a vacant plot of land 22 by 29 feet on Staten Island. Walz bought the property in 1967 and pays $5.55 yearly taxes on it.
South African Christians: Apartheid And Elections
With racial separation a key campaign issue, South Africa’s two major political parties are stumping for the Christian vote.
The rival pro-apartheid parties—the right-wing Christian National Party led by Dr. Albert Hertzog and the ruling Nationalist Party led by Prime Minister John Vorster—are vying to win the upcoming elections in the strife-torn land. Seventy-two per cent of all South Africans, and 94 per cent of the politically active white population, are registered members of Christian churches.
“For the first time,” says Hertzog, “we now have a party based on the infallible word of God. For the first time the Afrikaaners will now have a Christian national party.”
Answers Vorster: “We have always accepted that the Nationalist Party is based in word and deed on the infallible word of God, and that the party follows the Christian road.”
Hertzog, a former high-ranking member of Vorster’s cabinet, led the right-wingers out of the ruling party last September, charging that Vorster was going “soft” on the color question. The Nationalist Party first came to power in 1948, on an apartheid platform, claiming that the interests of the various South African racial groups would best be served by a policy of separatism.
Within the past two decades, two major debates have been quietly fought out within the Christian churches of South Africa: (1) whether or not the churches believing apartheid to be unchristian should openly condemn it, and (2) whether Christian brotherhood should be interpreted to mean that the Church and its local congregations should be multi-racial.
Panthers And Preachers
“It is hard to like the Panthers,” wrote Father Edward J. O’Donnell in the St. Louis Review last month; “they preach hatred in the coarsest terms.” Yet, he said, the Bill of Rights applies to them too: “It is only when the rights of the most radical, the most dangerous, and the most objectionable are protected that the rights of any of us can be safe” (see editorial, page 25).
He is not the only churchman preserving Black Panthers. Memorial services for Fred Hampton, slain last month in a battle with police, have been held in New York City, Washington, D. C., Cleveland, Chicago, and San Francisco.
Harvard’s Harvey Cox, Episcopal priest Malcolm Boyd, and lay Catholic theologian Rosemary Rcuther led 100 New Yorkers in a “Celebration for Liberation of the Black Panthers and other Political Prisoners.” Cox called the exorcism service an “ancient and venerable Christian tradition aimed at driving out evil spirits.”
In front of the Justice Department building in the nation’s capital, Episcopal and Catholic priests held a requiem mass for Hampton. “We are here,” said the Reverend William Wendt of St. Stephen and the Incarnation Church, “because there is oppression in the land,” and the Black Panthers are severely oppressed.
In Cleveland, Ohio, Representative Louis Stokes told war protesters at First Methodist Church that a lawyer for the Panthers has evidence of a “systematic plan in effect to exterminate” the party. “If the police can kill Black Panthers today with impunity,” asked the black U. S. congressman, “what is to prevent them from killing members of white organizations tomorrow?”
The controversial black Catholic priest who conducted Hampton’s funeral service in Chicago charged that the Panther leader had been “murdered because he was young, gifted and black.” Police and Panthers differ as to who fired the first shot in the gunfire that killed the 21-year-old chairman of the Illinois Black Panthers. Several church groups have called for investigations of the shooting.
Glide Memorial Methodist Church was the scene of a San Francisco rally to protest alleged police harassment of Black Panthers. The mostly white and mostly young audience heard Panther chief-of-staff David Hilliard, who threatened to kill President Nixon, reiterate his party’s commitment to use “revolutionary violence” against American “imperialism.”
With few exceptions, the division has been between the English-speaking churches, which traditionally have led the anti-apartheid movement, and the Afrikaans-speaking Dutch Reformed churches, from which the Nationalist Party has drawn most of its support.
The Reformed churches have declared that they cannot associate themselves unreservedly with the general cry for equality and unity, believing that eventual and permanent subordination of one group by another can be avoided only by a “just” but total separation. The anti-apartheid churches believe that racial separatism is “a demonstration of unbelief in the Gospel,” and that apartheid brings disruption and suffering.
Numerically, more South Africans belong to anti-apartheid churches, but the Dutch Reformed claim the overwhelming majority of the Afrikaaners, the only group with political power.
Recently, however, things have been changing as the anti-apartheid churches have gained more confidence and voice. The pro-apartheid ranks are split, and the extremist wing is not in power. Prime Minister Vorster now finds himself forced to strike a moderate pose. He has said that he has no answer to the race question and is willing to let responsible groups look for one.2Alan Paton, author of Cry, the Beloved Country and leader of South Africa’s Liberal party before the government prohibited multi-racial political organizations in May, 1968, is quoted in an interview by the New York Times as saying that he finds some hope of change in the country’s racial policies, and that the bitter feud between Vorster and Hertzog is cooling. Paton was also quoted as saying: “Vorster heads a power clique, but we are not in the hands of a madman.”
Churches are getting bolder: A sign at the entrance of St. George’s Anglican Cathedral in Cape Town reads—“This cathedral is open to welcome men and women of all races to all services at all times.” This is in defiance of a 1957 law forbidding integrated worship.
Last July, as a follow-up of the 1968 Message to the People issued by the South African Council of Churches, a two-year study project was set up to seek an alternative to apartheid. The 2,500-word message called on the Christians of South Africa to ponder whether their first loyalty should be to an ethnic group and a political idea, or to Christ.
Across the country, many church leaders and rank-and-file members are now asserting that no one who believes in Christ should be excluded from any church worship service, that Christians should take a keener interest in political and social action, and that there should be better contact between the government and leaders accepted by non-whites.
ODHIAMBO W. OKITE
