Should churches pay taxes?

The tax-exempt status of churches breeds injustice

Question: Should churches pay taxes?
Position1 of 2›: Yes, churches should pay taxes
Argument1 of 4›: The tax-exempt status of churches breeds injustice

All institutions, including religious ones, need to be held accountable for their finances.

The argument

Tax exemption does more than relieve churches of a bill. Because they enjoy tax-exempt status, they are generally not required to file tax returns, and the filing requirement is the mechanism through which an organisation's finances become visible to anyone outside it. Remove the requirement and the visibility goes with it: there is no routine point at which income is declared, expenditure is itemised, or the figures are examined by a body with the standing to question them. What that produces is an accountability gap rather than an accusation. An institution whose accounts nobody inspects is not thereby dishonest, but it is operating without the check that applies to comparable organisations, and the absence of a check is where problems become possible. Two in particular are identified: unfair wages for church employees, since pay decisions made without external scrutiny are answerable only to the people making them, and dishonest use of donations, since money given for one purpose can be spent on another without any record that would reveal it. Both depend on opacity, and the exemption supplies the opacity. The sums involved are what make this more than a technicality. Churches make a lucrative amount of money — enough that the handling of it is a matter of public interest rather than an internal concern of the congregation. Donors in particular have given on the understanding that their money serves the purposes the church professes, and at present they have no means of confirming that it has. The remedy proposed is the ordinary one. Requiring churches to pay taxes brings them within the system that requires returns to be filed and finances to be declared, which is how every other organisation handling money at that scale reassures the public that it is being used properly. On this reasoning the injustice lies in the exemption, and churches should pay taxes.

Premises

[P1]Because churches are tax-exempt, they generally need not file tax returns, so the government does not hold their finances accountable. [P2] This lack of accountability can lead to unfair wages for employees and dishonest use of donations. [P3] Since churches make a lucrative amount of money, they should have to reassure everyone they are using it properly. [C] Therefore, because tax-exempt status breeds injustice, churches should pay taxes.

Counter-arguments

If churches are required to have government approval for their finances, the government could restrict their religious practice through forbidding financial decisions that they disapprove of.

Rejecting the premises

[Rejecting P3] Giving the government access to churches' finances may encourage government interference with freedom of religion.