The unconstitutionality of Property tax and chuch.

[BigBang]

Is it me, or is the church not being taxed, a direct violation of the establishment clause of the first admendment? I don't know if this is too obscure a subject for this forum, but I want to see what other liberals have to say about this.
I can see that this law, statute, whatever it is, is obviously a tradition started during the more religious time in American history, but I think we have progressed beyond giving special treatment to religious organizations, and it's time to start taxing the property of churches. We are a point where all church and state connections, should be severed, but I begin to wonder if other agree, I mean Bush gave the money promised for firefighters, and policemen, to chuch's, and I haven't seen anyone get upset over that.

[CarlBallard]

1. It's my understanding

That Churches aren't taxed because they are non profit groups, not because they are religions per se. I don't really understand tax law though, so don't think of this unlinked post by someone you don't know as definative.

[teryang]

2. The power to tax is

...the power to destroy. Therefore taxation upon religious institutions is the exact opposite of the establishment prohibition, it ia a restriction upon the free exercise of religion. As long as communities freely associate for religious expression, they shouldn't be taxed. Then the question arises are they a religion or something else? I'd like to qualify my family as a religion, or my business as a religion.

Here is a more mysterious inequity in the tax code. Businesses are allowed to write off virtually every expense as either a tax deduction or credit. They are only taxed on NET PROFIT. Yet families and individuals are taxed on expenses as well as profit. Families are taxed on gross income with relatively limited adjustments. Businesses have virtually unlimited deductions.

I think my family should only be taxed on NET PROFIT, that is the money left over after all our expenses. Unlike all businesses, I don't get to write off the rent, the utilities, the costs of my transportation, food, insurance etc. because my institution isn't qualified to do so, it's ONLY a family, or ONLY a person. I don't get depreciation for my cars or durable equipment like washers or refrigerators but corporations get depreciation deductions on everything durable that they buy. Operating supplies are a direct dollar for dollar deduction for a business. Businesses get deductions for all interest paid on loans. I think all households should be taxed the same way corporations are.

My tax deductions and credits as an individual are limited to puny amounts which limits my ability to allocate gross revenue in the most efficient way possible to avoid taxation. No such comparable limitations exist on businesses. This is a reflection on the relative power in our society of corporations as compared to the individual. Individuals without corporations are in virtual bondage to the state while corporations basically can do whatever they like with their resources to avoid taxation. The accumulation of capital by a corporation proceeds virtually unimpeded by the Federal tax code and is even rewarded by depreciation schedules. The accumulation of capital by the average individual usually only results in more taxation.

Do yourself a favor. Incorporate. You won't believe the money you don't pay in Federal taxes.

[donco6]

5. I owned a business, and I was taxed on more than . . .

net profit.

I also had to pay tax on my inventory each year. Hence the benefit of the depreciation. The only capital that an individual is taxed on is the value of property, which can appreciate. But there are benefits to that as well, namely, the asset value to be used to leverage loans. Also, I find my deductions to be considerably more than "puny" in that my deduction for home loan interest adds up to a considerabe amount.

In addition, the businesses here are assessed at a ratio much higher than homes (29% of actual value as compared to 7.8% for residential property).

While there is much truth in your comments, it's not all roses for small businesses like mine.

[davsand]

3. Churches are usually holding an IRS 501(c)(3) designation.

To give you a bit of info about the nature of a 501(c)(3) designation here is a short explanation:

The organizations described in IRC Section 501(c)(3) are commonly referred to under the general heading of "charitable organizations." Organizations described in IRC Section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with IRC Section 170.

The exempt purposes set forth in IRC Section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening of neighborhood tensions; elimination of prejudice and discrimination; defense of human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

Read all about the IRS designation here:

http://www.irs.gov/charities/article/0,,id=96099,00.html



Now, to address your question about local property tax exemptions:

If an organization holds a 501(C)(3) typically they are able to apply for a property tax exemption. (I can only speak for Illinois Property Tax Code, so you may want to check this in your own state--OK?) In Illinois, a property must qualify for exemption under two criteria. It must be held (owned) by a non-profit (charity) and it must be used for charitable purposes.

It can--and does--happen that a church owns property and uses it for a non-charitable purpose and they are forced to pay property taxes. To give you an example, a church was located in a downtown area and they had a paved parking lot that was a large one. Because parking was at a premium, the church rented spaces out in the lot during business hours. That was ruled a non-exempt use and the church was forced to either stop renting spaces or else pay taxes on the lot.

The IRS designation is not enough to automatically qualify for the exemption.

Again, I want to emphasize that this is Illinois I am talking about. I have no idea of the standards in other states I have only worked with illinois Property Tax Code.

Now, if you want to discuss the IRS designation of a charity, and why it should be changed, that is a whole different matter. Frankly, I agree that IRS code is antiquated and needs to be revisited. IMO, the Church exemption is a lot less suspect than the ones enjoyed by hospitals. Hospitals get property tax exemptions and the local community gets exactly WHAT in return? An ER? A pediatrics ward? They SUE you if you don't pay, and they hire collection agencies. YOUR local property taxes support that... That, IMO, is a huge rip off.

Laura

[Fescue4u]

4. As long as all churches are un taxed

Its not a constitutional problem.

Now if the government decided that xyz Church gets a break and zzz church does not..well then that could be construed as an established religion etc.