Those who are interested in Church-State relations in the United States dare not take for granted as good and permanent the religious tax exemptions presently in effect in the nation and in the several states and municipalities. The subject needs to be discussed despite the hesitancy caused by the fears of churchmen that merely to raise any question opens the churches to the possibility of crippling taxation and the hesitancy of government officials caused by their fears of appearing to be antireligious if they even speak of taxing churches. The already complex Church-State question is further complicated by competitive concerns of churches with each other, especially typical Protestant fears of increasing Roman Catholic power, and typical Roman Catholic interpretation of all Protestant political action as being primarily anti-Roman Catholic.

Writing for an American audience one may take for granted (except possibly among some Roman Catholics) the universal acceptance of the assumption that the Bill of Rights is here to stay, preventing the establishment of religion, which at the least means that no single church shall have preferential financial or other support by the state and, as usually more broadly interpreted, means further that churches in general must depend upon the voluntary gifts of their adherents for their support and not upon the taxing power of federal, state, or municipal governments. Most Americans, in contrast to many Europeans, believe that this is a good arrangement for both Church and State. They point to the vigor of these competitive American churches and the freedom in the United States of the nonreligious to be nonreligious as values more than counterbalancing any possible national advantages put forward as the result of church establishment. The chief arguments for church establishment are national unity (one church, one people), securing a place for religion in public education, protection against the ultimate secularization of the state, and sect proliferation. In any case American churchmen need seriously to grapple with the charge made by the antireligious that church tax exemption in the United States is but a slightly concealed form of tax support of the churches. The writer remembers vividly the keen interest in this subject shown by Soviet churchmen in discussions three years ago in which they asked whether our separation of Church and State in the United States was really as complete as we advertised it to be and whether their Church-State separation in the Soviet Union was not in fact more nearly honest and complete. Church taxation and exemption from taxation equally imply some kind of philosophy of Church-State relationship that is definitely not absolute separation of Church and State.

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I here assume, then, some relationship between Church and State, believing that absolute separation, “a wall of partition,” is an unrealized myth and I assume further that we wish to preserve the freedom and autonomy provided for the churches under the Constitution of the United States. The clear implication of these two assumptions is that we should discuss tax exemption of churches reasonably and rationally without being subject to emotional tirades from those on the one hand who believe churches should be supported by taxes or from those on the other hand who say, “the power to tax is the power to destroy” and that, therefore, churches for their life and freedom must resist any and all taxation. I assume rather that it is our problem to assess the amount of taxation or tax exemption which would best serve the interests of both the churches and the several organs of government which have the tax power. I reject the notion apparently held by some churchmen that the less taxation there is upon the churches the better off they will be and the equally materialistic notion apparently held by some officials that the more taxes that can be levied the better off will be the government and community.

Tax exemption for churches and religious institutions must be examined in the light of the whole practice of government’s granting exemption to various bodies for various purposes. William H. Anderson writes: “The theory behind property tax exemption is that some properties have special characteristics which make it socially advantageous to exclude them from taxation.… Among the most common purposes may be found the following: 1. To prevent intergovernmental taxation; 2. To encourage activities which would otherwise be supported by government; 3. To promote desirable social undertakings; 4. To influence the location of industries; 5. To improve property tax administration and compliance; 6. To avoid double taxation; and 7. To record services rendered such as veteran’s property exemptions.” (William H. Anderson, “Taxation and the American Economy,” Prentice Hall, New York, 1951, p. 158.)

Although Anderson is here concerned with property tax exemption only, the seven purposes listed may be applied as well to the wider question of tax exemption with which this paper is concerned. My point is that any tax exemption that is allowed to churches or church organizations must be seen from the point of view of government as justified by one or more of these seven or like purposes. Tax exemption for churches would be chiefly based upon reason three—“to promote desirable social undertakings” and to a much less extent, at least from Protestant theory, reason two—“to encourage activities which would otherwise be supported by government.”

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The thesis of this paper is that while all of us would doubtless hold that churches and their activities are “desirable social undertakings” and, therefore, may properly be encouraged and aided by government tax policy; nevertheless, tax exemptions which are proper when churches are small, poor and weak may have highly unfortunate results to the churches and to the society when the churches have grown large and rich.

Invitation To Expropriation?

I need not labor the point that too much tax exemption, for whatever reason, becomes a serious problem to government. The growing urban centers of our country are all struggling to find a broad tax base able to support the growing demands for police and fire protection, for education services, and for social welfare requirements of the citizens. Since, however, the biggest tax exemption problem in most cities and states is intergovernmental tax exemption, it is clear that this problem would not be solved even if all religious tax exemption were eliminated. While this is true now, I suggest that 100 years from now the present pattern of religious tax exemption by federal, state and municipal authorities, if continued, may present the state with problems of such magnitude that their only solution will be revolutionary expropriation of church properties. When one remembers that churches pay no inheritance tax (churches do not die), that churches may own and operate business and be exempt from the 52 percent corporate income tax, and that real property used for church purposes (which in some states are most generously construed) is tax exempt, it is not unreasonable to prophesy that with reasonably prudent management, the churches ought to be able to control the whole economy of the nation within the predictable future. That the growing wealth and property of the churches was partially responsible for revolutionary expropriations of church property in England in the sixteenth century, in France in the eighteenth century, in Italy in the nineteenth century, and in Mexico, Russia, Czechoslovakia and Hungary (to name a few examples) in the twentieth century, seems self-evident. A government with mounting tax problems cannot be expected to keep its hands off the wealth of a rich church forever. That such a revolution is always accompanied by anticlericalism and atheism should not be surprising. This leads me to examine the negative effects of tax exemption upon the life and purposes of the churches themselves which ought to be the primary concern of churchmen.

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Are The Churches In Jeopardy?

I suggest that already in the United States there are discernible signs of a growing antichurch feeling, not yet developed into full blown anticlericalism which will increase rather than decrease as the years go on. It may be that one of the reasons for the greater growth of the store-front sects is the unconscious self-identification of the common man with the “have-not” poor and his perhaps unconscious identification of the “old line” churches, Protestant and Roman Catholic, with the rich managers of society. History makes it clear that social welfare and educational enterprises by the churches, however much appreciated, are not sufficient of themselves to make a poor man love a rich church.

While I have myself argued that to build a beautiful church can have results both culturally and religiously good, I am quite sure that overly rich and overly ornate structures have a negative effect on evangelism and distort the people’s understanding of the Gospel. At a time when Americans think nothing of putting 30 to 40 thousand dollars into their suburban homes, and small communities vote several millions of bonds for the public schools, and the local savings banks and department stores house themselves in artistic contemporary monumental homes, it is clear that it would be embarrassing if these same people did not want to build beautiful and expensive churches. (I have used this argument to encourage reluctant givers to church building funds.) Our culture would be proved less Christian than it is if there were no great churches and church institutions being built. Yet admitting all this, the fact remains that the effect of an expensive church upon those outside its membership is ambiguous.

But this is the outside and visible part of the problem. The economic power that will increasingly be wielded by ever richer churches threatens to produce not only envy, hatred, or resentment of nonmembers, but also to distort the purposes of the church members and leaders themselves. The higly endowed Protestant central city church, with its able and articulate and dominating trustees, does not usually carry on a Christian program to which denominational leaders or others point wtih pride. That denominational leaders themselves will behave in a very much more Christian manner when their financial concerns are the investment and management of increasing endowments rather than the scraping of the bottom of the financial barrel to find support of their overextended operations in an inflationary time, I am not at all sure. I am sure that great concentration of wealth and economic power in the hands of the American churches will in the long run frustrate the very ends which they proclaim and profess.

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In case it appears to any that the dangers in this area are all in the future and that they are overdrawn, I would merely remind you that under present tax laws rich people are being encouraged to give to churches since big gifts can be made which cost the giver little or (in some odd cases) nothing. I remind you that deals are being offered to church trustees by which they can buy businesses and pay a management fee to the present owners which puts both the managers and the church in an advantageous position with reference to their business competitors.

Perhaps the above is enough to establish my main point, namely, that to continue the present church tax exemptions indefinitely into the future will jeopardize not only the stability of government but the program and effectiveness of the churches themselves.

Some Pointed Questions

Although I do not propose here to outline a new policy, I should like to isolate a few questions, partly rhetorical, on which I believe we can well spend some time and thought. Changes in tax structure are admittedly very complex, and very often the “side effects” of a tax law are in the long run more important than its obvious end. That is one reason for raising questions rather than suggesting answers.

1. Should not all of the churches attempt at once to secure the repeal of the section of the Internal Revenue Code which allows “churches and church organizations” exemption from the corporate tax (generally 52 percent) on income from business organizations unrelated to the purpose or activity of the Church or its organizations? Although relatively little use has so far been made of this provision by the churches, it is clear that over 20 percent could be safely earned on church investments in place of the three, four, or five percent now being earned. It works this way. Buy a business that earns six percent, now after taxes, a not unusual return. Buy it for one million dollars. Put up cash (church endowment) of 400,000. Borrow 600,000 at four per cent. Result: income on 400,000 dollars invested equals 96,000 per annum. The safety of such an investment is enhanced by the fact that the pricing policy of the company could be handled to make certain that no competitor could steal away the business.

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2. Should the churches take the initiative in approaching local tax authorities to the end of developing a system whereby the churches would begin to make contributions to the municipal governments of one per cent of the real estate tax that would be due if this property were taxable, increasing the contribution by one per cent a year to a ceiling of ten per cent?

3. Should the churches examine their related business enterprises to assure themselves that their practices in these fields are not unfairly competitive with other businesses operating in the same area?

4. Should the churches support a department in the National Council of Churches which would study this field to ask more pertinent questions and to implement their answer?


Preacher In The Red


My grandfather, a preacher, told me this story:

“Fifty years ago, preachers used to express their zeal and enthusiasm by preaching in a loud voice, hitting the pulpit with their fists, and running on the platform to and fro.

One Sunday I was invited to preach in a village church. It was a rainy day, and the congregation was made up of three men and one woman. As I warmed up in my preaching, the woman started to weep. The more enthusiastic I became, the more tears poured from her eyes. I felt that a soul was coming to God in penitence.

When the meeting was over, I went to see her.

‘I was deeply moved,’ I said, ‘to see your response to the message.’

‘Yes preacher,’ she answered, ‘your voice reminded me of my ox which died last week.’ ”—The Rev. MENIS ABDUL NOOR, Herz via Etlidim, Egypt, U.A.R.

For each report by a minister of the Gospel of an embarrassing moment in his life, CHRISTIANITY TODAY will pay $5 (upon publication). To be acceptable, anecdotes must narrate factually a personal experience, and must be previously unpublished. Contributions should not exceed 250 words, should be typed double-spaced, and bear the writer’s name and address. Upon acceptance, such contributions become the property of CHRISTIANITY TODAY. Address letters to: Preacher in the Red, CHRISTIANITY TODAY, 1014 Washington Building, Washington 5, D. C.

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Eugene Carson Blake is Stated Clerk of The United Presbyterian Church in the U.S.A. Member of the central and executive committees of the World Council of Churches, he has served in the capacity of president and is currently on the General Board of the National Council of Churches. He holds the A.B. from Princeton University, Th.B. from Princeton Seminary, and honorary doctorates from nine colleges. He is trustee of Princeton and San Anselmo seminaries.

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