In theory, churches should make attractive neighbors. They are places of prayer, worship, and good works. When you see a sign pop up in an empty field announcing new church construction, you might think of the new families that will move to the neighborhood, the children who will attend the youth group, and the volunteers who will run the Vacation Bible School.
But that’s not how the suburban town of Stafford, Texas, responded. The city council instead instituted a review process to make it harder for churches to build there, preferring a factory or big-box retailer takes the space instead. When that didn’t work, the council instructed the city lawyer to see if he could find a way to keep churches out.
“I don’t hate God. I’m not against America and apple pie,” a city councilman told the Los Angeles Times in 2006. But, he insisted, churches were a problem. For one reason: They don’t pay their share of taxes.
“Zero revenue,” the councilman said. “Somebody’s got to pay for police, fire and schools.”
This feeling that churches don’t contribute to the common good is not uncommon in America. There are many municipalities that view churches as basically parasitical, receiving all the protection and benefits of local government without bearing their fair share of the financial burden. Cash-strapped towns have frequently tried to use zoning laws to block the development of new churches and are only stopped when the federal government enforces the religious land-use laws that Christian groups advocated for in 1993 and 2000.
These laws were framed as defenses of religious freedom, and there are indeed cases of hostile local governments wanting to limit religious expression because they find the preacher or theology of a church objectionable. But more often it is tax exemption itself that makes churches unwelcome neighbors. It is not the offense of the gospel that has made these churches toxic; it’s their tax-exempt status. Perhaps it is time to count the hidden costs of tax exemption.
The issue of church tax exemption has come up during the Democratic presidential primary, most notably at a town hall last October focused on LGBT issues. Former Texas congressman Beto O’Rourke was asked whether “religious institutions like colleges, churches, charities” should lose their tax-exempt status if they oppose same-sex marriage. O’Rourke’s answer was a straightforward “yes.” He elaborated that “there can be no reward, no benefit, no tax break for anyone, or any institution, any organization in America, that denies the full human rights and the full civil rights of every single one of us.”
O’Rourke’s comments provoked an immediate wave of criticism from conservatives. Evangelist and political activist Franklin Graham tweeted that he would “not bow down at the altar of the LGBTQ agenda nor worship their rainbow pride flag.” O’Rourke was critiqued by liberals as well. Presidential hopeful Pete Buttigieg, who is himself in a same-sex marriage, condemned O’Rourke’s recklessness, saying the congressman had not thought through the implications of his radical position.
A Contentious History
This is not a new debate, however. Church tax exemption in America dates back to the 18th century, an inheritance from the European tradition of state-supported (also known as “established”) denominations that were exempt from paying taxes and, in fact, were supported by taxes levied on the general public. The privileges of establishment came with a degree of government control over churches and had a stultifying effect on religious life. Evangelical dissenters from the established churches like Isaac Backus and John Leland joined with freethinkers like Thomas Jefferson to end religious establishments by separating church from state. When evangelicals were on the religious periphery looking in, they were opposed to special government favors for religious groups.
However, as membership in evangelical denominations swelled during the Second Great Awakening, evangelicals went from outsiders to insiders. At the same time, government taxing authority grew—with new forms of income, property, and corporate taxes—and churches were given favorable treatment. The result was a new form of religious establishment, albeit a more generalized version, with tax exemptions.
There were periodic attempts to limit the church tax exemption, like when President Ulysses S. Grant, in his 1875 State of the Union address, called for “correcting an evil that, if permitted to continue, will probably lead to great trouble in our land.” Grant argued that churches received “all the protection and benefits of Government without bearing [their] proportion of the burdens and expenses of the same.”
Many Christians today simply assume that the tax exemption is a natural prerogative, the potential loss of which should be either lamented or fought against with whatever political influence remains. They have become so used to tax-exempt status for churches that they struggle to imagine a world in which that status does not exist yet churches still do.
Christian apprehensions about the removal of tax-exempt status for religious organizations have been commonplace since the US Supreme Court’s decision in Bob Jones University v. United States (1983). The proximate issue in that case was not opposition to same-sex marriage, rather opposition to desegregation at religious institutions, especially fundamentalist high schools and colleges.
Bob Jones University claimed its ban on interracial dating was rooted in religious belief and, as such, ought to be protected by the First Amendment to the US Constitution. Internal Revenue Service (IRS) rules from the 1970s said organizations that discriminated on the basis of race were not entitled to tax exemptions. The school lost the case because the court found that an infringement on religious liberty could be justified when “necessary to accomplish an ‘overriding governmental interest’ ”—like ending racial segregation.
Historian Randall Balmer argues the evangelical backlash against the court’s ruling propelled the rise of the new Christian Right. Conservative political activist Paul Weyrich used the threat of losing tax-exempt status for segregated Christian schools—reframed, of course, as a matter of religious liberty—as the wedge issue to organize a conservative grassroots movement. He cofounded the Moral Majority with Jerry Falwell Sr., who was worried about the tax implications for Lynchburg Christian School, his segregated academy and the precursor to Liberty University.
Balmer’s thesis remains an open subject for debate among historians, but the Bob Jones case certainly deepened conservative Christians’ sense of cultural isolation. They perceived themselves to be victims of secular elites who disdained the faithful. As university president Bob Jones III put it at the time, once “there were a lot of people who felt the way we did. We were in the mainstream. Then liberalism came in and everyone turned away and those who didn’t looked like little islands in the stream.”
In the university chapel on the day of the court ruling, Jones said, “Our nation from this day forward is no better than Russia insofar as expecting the blessings of God is concerned. You no longer live in a nation that is religiously free.”
None of the conservatives involved at the time showed any concern about whether the blessings of God might instead be withheld from their religious institutions because they had fought so hard to defend the vestiges of a dying white supremacist order. It wasn’t until 2008 that Bob Jones University finally apologized for its racist policies. Other formerly segregated churches and schools haven’t done that much. Hyperbolic claims about the end of religious liberty have often been followed by deafening silence.
It is unlikely that many Christians today would sympathize with Bob Jones University’s fight to maintain racial segregation. Public opinion has shifted to the point where many Christians have forgotten that appeals to religious liberty were once a crucial buttress for Jim Crow segregation. But the rhetoric that conservative Christians used in the early 1980s is very similar to the rhetoric used today, albeit directed at same-sex marriage rather than interracial dating. As the Republican governor of Florida Rick Scott put it, Democrats “don’t care about religious liberty” and have “a complete disregard for the freedoms guaranteed in our constitution.” Ben Sasse, Republican senator from Nebraska, called O’Rourke’s answer “un-American.”
O’Rourke’s comments reveal the transformation of what seems politically possible, what political observers call a shift of the “Overton Window.” Secular views about same-sex marriage have changed dramatically over the past decade—much faster than views on segregation changed a generation ago. And it is not only secular views that are changing: Many young evangelicals say they are fine with same-sex civil marriage. Conservatives who fear they will be in the minority on the issue may well echo Bob Jones III’s complaints about being marooned on “little islands.” The tide is already coming in.
This dramatic shift is visible in recent court decisions. During oral arguments for Obergefell v. Hodges (2015), in which the Supreme Court invalidated state bans on same-sex marriage, Justice Samuel Alito asked whether the case at hand, combined with the precedent from BJU v. US, would empower the IRS to revoke the tax-exempt status of religious schools opposed to same-sex marriage. The government’s representative answered clearly: “It’s certainly going to be an issue.”
The tax-exempt status of churches opposed to same-sex marriage has not been challenged in court, but it may only be a matter of time. Ross Douthat, a conservative Catholic columnist at The New York Times, alluded to this in a prescient essay written a year before Obergefell. The title of Douthat’s article—“The Terms of Our Surrender”—communicates something of his mood at the time. Conservative Protestants and Catholics had lost the battle over same-sex marriage. All that remained was for the spoils from the culture war, among them tax exemption for churches, to be divvied among the victors, who would decide whether to be magnanimous or punitive to the defeated.
Douthat’s article represents a more dovish impulse within conservative Christianity. There is regret in Douthat’s words, a sense that Christians have fundamentally mistreated the LGBT community via law and culture and will now reap the whirlwind they had sown. This is in sharp contrast to the hawkish defiance of other conservative Christians, such as Graham.
Despite the difference in mood between the likes of Douthat and Graham, there is something that unites both doves and hawks. It is the assumption that the religious tax exemption has been good for churches and Christians—a failure to account for the costs of this government-granted privilege.
The most straightforward downside of tax-exempt status is that it prohibits clergy from expressly endorsing or opposing any politician and from advocating for particular pieces of legislation.
The prohibition on endorsements—known as the Johnson Amendment after its sponsor, Texas Sen. Lyndon Johnson—was passed in 1954. It was always meant to have a chilling effect on speech. Johnson proposed the amendment because he was mad at two tax-exempt organizations that had supported his opponent. But since the rule was passed during a time of relative consensus when mainline churches dominated Protestantism and both major political parties hewed closer to the ideological center, the suppression of religious or political dissent did not weigh heavily on the minds of those in power. The amendment passed almost without comment.
Few Christians noted the cost at the time. But soon a bill came due for one of the most prominent religious broadcasters of the day. Billy James Hargis, a traveling evangelist and anti-Communist minister from Oklahoma, aired his show Christian Crusade on more than 200 radio stations by 1962. President John F. Kennedy worried that conservative broadcasters like Hargis were hurting his chances of reelection. So Kennedy ordered the heads of the IRS and the Federal Communications Commission to scrutinize conservative Christian organizations.
The IRS subsequently revoked Hargis’s tax exemption. This led to a long, expensive legal battle over whether his radio ministry had indeed violated IRS rules by discussing political candidates and legislation. Hargis ultimately won in court, but it was a Pyrrhic victory. His radio ministry suffered dramatically during the multiyear fight from a decline in donations and a drop in the number of stations willing to air his show.
Hargis shows how tax exemption can operate as a tool of political control. Cases like this, of course, have been few and far between. The Johnson Amendment has been honored mostly in the breach. Subsequent generations of religious broadcasters, like Pat Robertson and the televangelists who rose to prominence in the 1980s, have not often been targeted like Hargis was. Yet that is an artifact of a time period in which religious groups in general had elevated cultural status and conservative Christians in particular had the political clout to defend their tax privileges.
That could change quickly. It’s worth remembering that both James Dobson’s ministry Family Talk Action and Franklin Graham’s ministry Samaritan’s Purse were scrutinized by the IRS during President Barack Obama’s administration. In the future, we may well see more examples of tax exemption being used to pressure ministers into avoiding certain political stances.
Christians, however, should be just as concerned about the chilling effects they impose on themselves as they are about those imposed on them by hostile outsiders. It is impossible to quantify, but the church’s prophetic witness is certainly harmed when its clergy are not free to condemn corrupt politicians who prey on the poor, the vulnerable, and the sojourner.
It is no accident that black Christians are much more likely to believe that the clergy have a responsibility to comment on politics from the pulpit. Black congregations have endured a long history of persecution. They remember their churches being bombed, burned, and attacked by racists, many of whom were themselves practicing Christians. They remember too that black clergy played a vital role in securing equal rights for African Americans. They have lived by faith on the political and cultural margins, but they stood up and spoke up. As a result, black preachers today are more likely to exercise their prophetic voice to condemn injustice, praise righteousness, and speak about politics.
Indeed, calls to keep politics out of the pulpit are a rhetorical echo of those who once opposed desegregation, including pastors who defended Jim Crow laws. Jerry Falwell Sr., for example, preached a sermon titled “Ministers and Marches,” criticizing ministers like Martin Luther King Jr. for being politically active. Of course, Falwell was himself engaged in political activism by opposing desegregation. Perhaps he couldn’t see it, but he wasn’t avoiding politics, just supporting the status quo.
Not discussing politics from the pulpit is a privilege that accompanies majoritarian status and access to formal political power. Bans on political advocacy by tax-exempt groups benefit political and religious incumbents, adding extra risk to dissent. Black churches know this. Hargis and Bob Jones University learned it the hard way. Christians opposed to same-sex marriage might take note, as they feel themselves slipping from the cultural center toward the periphery.
Many white evangelicals were thrilled when President Donald Trump signed an executive order in May 2017 that purported to end the Johnson Amendment. The order, however, actually only temporarily tweaked enforcement priorities. The next president might change that. But while getting rid of the Johnson Amendment might mitigate the chilling effect in particular cases, it would not address the more fundamental problem, which is that tax exemption will always be a potential tool for majoritarian political interests to suppress minority interests.
The Johnson Amendment is also not the only part of the tax code that limits what tax-exempt ministries can do. Hargis was hit with a clause in the law that prohibited “carrying on propaganda, or otherwise attempting to influence legislation.” Johnson Amendment or not, tax-exempt status will always carry within itself a tacit chilling effect on clerical speech and the possibility of political coercion. That’s a hidden price of the privilege.
Demanding Special Treatment
But there is a more fundamental cost that Christians should consider. How does it affect our relationships with our non-religious neighbors?
While a religious tax exemption benefits the variety of religious groups in the US, it is not available in any way to the irreligious. It is not unreasonable for the irreligious to see tax exemptions as a massive government subsidy for religion. By one conservative estimate, federal and state government religious subsidies amount to a $82.5 billion transfer each year. Meanwhile, the percentage of Americans reporting no particular religious affiliation continues to rise. The “nones” now compose 23.1 percent of the population, recently becoming the largest group in the American religious landscape ahead of both Catholics and evangelicals.
It should not be surprising, then, that calls for ending the religious tax exemption have grown apace. We should expect them to continue to grow. Put yourself in their shoes for a moment: Most Christians would look askance at passing a law requiring everybody in a community to be members of a church. For consistency’s sake, why then would it be okay to use government power to force everybody in a community to financially contribute to churches?
The standard defense for the religious tax exemption is to emphasize the “spillover effects” or the “halo effect” of having a church in the neighborhood. For example, many religiously affiliated daycares and after-school programs open their doors to the general public, meaning that the tax subsidy given to the organization benefits all children who attend regardless of whether their parents are religious.
However, this argument ignores the fact that charities are already exempt from taxes, whether they are housed in churches or not. Almost every religious outreach that is not part of the actual worship service could be re-registered under one of the other exempted categories, like the educational, charitable, and literary. The tax-exempt status of churches isn’t a requirement for people of faith to do good works (or to receive taxable benefits when doing so).
Again, the history of religious land-use laws is enlightening here. Using the federal government to protect tax-exempt status for churches is not a recipe for a stable, long-term equilibrium. It only works as long as Christians can maintain a white-knuckled grip on power, fighting to maintain their tax advantages by tooth, claw, court case, and ballot. The gospels tell us to love our neighbors as ourselves. This is certainly a strange way of doing it. After all, why did Jesus, when asked if he owed taxes to Rome, say, “Give back to Caesar what is Caesar’s and to God what is God’s” (Mark 12:17)? It is far better to live peaceably with all people, giving “to everyone what you owe them: If you owe taxes, pay taxes” (Rom. 13:7).
It might not be such a bad thing to lose tax-exempt status. We should consider, at the very least, the cost of maintaining this kind of cultural privilege. The true church of God, after all, is not reliant on its special status in the tax code. We can walk by faith and not by government largess.
Paul Matzko is a historian of American religion and politics. His first book, The Radio Right: How a Band of Broadcasters Took on the Federal Government and Built the Modern Conservative Movement, will be published by Oxford University Press in April.
Have something to add about this? See something we missed? Share your feedback here.