United States subsidize religion—to the tune of about $71 billion a year.

Discussion in 'Religion and Spirituality' started by Free Thinker, Jun 26, 2012.

  1. Research Report: How Secular Humanists (and Everyone Else) Subsidize Religion in the United States

    In order to calculate the government subsidy resulting from tax-exempt donations, we assumed that religions would be taxed at the maximum federal corporate tax rate, given their revenue (for example, the United Methodist Church parent organization falls into the highest corporate tax bracket, as would most local congregations). Using this assumption, the subsidy to religions in the form of lost corporate tax revenue to the federal government is about $35.3 billion annually.16 We estimated that states subsidize religions to the tune of about $6.18 billion per year as well by not requiring religious institutions to pay income taxes.17 Given the literally thousands of different local corporate tax rates, we did not calculate the subsidy to religions from local governments, but it would likely add hundreds of millions of dollars more in subsidies.

    We were also unable to come up with estimates for the size of the other three sources of revenue: fund-raisers, volunteer labor, and unrelated business income. We assume that the fund-raisers and volunteer labor do not contribute nearly as much to the overall revenue of religions as do the donations received. Also, religious institutions should be paying taxes for their Unrelated Business Income and appear to be doing so, though possibly at reduced rates. For instance, the Mormon Church owns a billion dollar ranch in central Florida.18 Careful examination of the tax record suggests that the Church may be paying just 0.03 percent in property taxes (i.e., three-hundredths of 1 percent) as compared to other landowners in Osceola County, who are paying about 1.68 percent.19 If the Church were paying the full rate—1.68 percent—it would pay almost $16.8 million per year in property taxes for its $1 billion ranch, but it appears to be paying closer to $300,000 per year. Why the LDS Church is paying at a reduced rate is unclear. Regardless of whether it pays the full tax rate or not, it is paying something. But this is just the property tax; there is no way to know how much money is generated from the ranch or any other religion-owned for-profit corporation. As a result, we were unable to calculate these sources of revenue. We can only guess, then, that we are underestimating the overall subsidy to religions in the United States, probably by billions.

    As if the tax-free incentive to religions were not a sufficient subsidy, donors to religions get to deduct those donations from their taxable income when calculating their income taxes.20 Up to 50 percent of one’s income can be donated and written off.21 However, this is not a direct subsidy to religions but rather to religious people. It does, however, result in an even more indirect subsidy to religions because it results in more donations: people would rather give their money to their religion than to the government, and they do so when it is financially beneficial for them.22 Thus, the indirect subsidy to donors actually increases donations to religions, reducing taxes paid to the government. Given the complexities in calculating deductions in taxable income and the fact that most of the subsidy is to religious people and not the religions, we were unable to arrive at a reliable estimate of the size of this subsidy to religions.

    In addition to paying no tax on donations, religious institutions pay no property taxes. The Hartford Seminary estimates that there are 335,000 congregations in the United States.23 Using forty-seven churches in Tampa from six different religions as our basis (Presbyterians, Mormons, Baptists, Methodists, Episcopalians, and Pentecostals), we estimated that the average value of a church in the United States today is about $1.7 million (land and building).24 Because property taxes are paid at the state level, we averaged the total number of churches across all fifty states, multiplied the estimated number of churches by the average value, and then calculated the lost state revenues. States subsidize religions to the tune of about $26.2 billion per year by not requiring religious institutions to pay property taxes for property worth about $600 billion. 25 This subsidy is of particular interest because property taxes pay for services such as firefighting and police, which religious institutions use the same as corporations and private citizens.

    Religions also pay no investment taxes (such as capital gains taxes). Most people probably do not realize that many religions have investments. These can result from surplus cash donations or donations of investment instruments such as stocks, as noted above. Some denominations have such large endowments that they have split the endowment off from the denomination so that it can be managed independently. A good example is the Presbyterian Foundation, which manages $1.9 billion in assets.26 Just as with donor income, religions are supposed to report their investment portfolios or investment income27 but can be exempt from doing so. And just as with donations to religions, the IRS does not report on these at any level, making it difficult to determine the amount religions have invested. We found an estimate for endowed Presbyterian churches from a book on the finances of American religion in the mid 1990s.28 They estimated that the total of Presbyterian endowments in the mid 1990s was $500 million.29 Using that number, we generated a per-capita endowment for Presbyterians and then multiplied that by the number of adults in this country who consider themselves religious. Our best estimates suggest the total investments held by religions here are somewhere close to $18 billion. The subsidy to religions from not paying capital gains taxes is rather small compared to the other subsidies—somewhere around $41 million per year. 30

    We also know that religions, when purchasing goods and supplies, are not required to pay sales tax in states that collect sales tax. However, we were unable to arrive at a reliable estimate of how much this subsidy would be because there is no clear basis for calculating the amount religions spend on such goods and services.

    The situation regarding ministers and employees is a bit more complicated. Actual employees of religions (janitors, groundskeepers, and the like) pay taxes like everyone else—both income and Social Security taxes—and the taxes are typically withheld by the religions and paid directly to the IRS or state or local governments.31 Thus, there is no subsidy for religions’ employees. But ministers (pastors, rabbis, priests, and so on) are typically not considered religious employees. Often they are categorized as subcontractors and are required to pay their own taxes.32 They are taxed, for the most part, at the same rate as everyone else in the United States who is self-employed, with two exceptions.

  2. You be hatin' on the church. This story does remind me of the time when I had a local church member come in to my store and ask if I'd like to advertise in their weelky bulletin. The church was only a mile from my store so I said sure, for 50 bucks I ought to get some customers. Month goes by and I don't see a single person with a coupon from that advertising. Same gal comes back in and ask's if I'd like to renew my advertising. I tell her I haven't seen a single sale from her church members. She then tells me I can just consider it a "contribution" if I like. Let's just say my response was less than friendly.:eek:
  3. 71 Billion a year and in return we get both life and everlasting life.
    *except for Free Thinker, you will end your time as maggot droppings.
  4. Lucrum


    Just think, if congress revokes the church tax status Obama can afford to spend more time touring the world on Air Force One.

    (I'm actually in favor of no special tax status for anyone)
  5. whatever superstitious things you have been indoctrinated to believe has no effect on reality. everyone goes the same place when they die.
  6. wildchild


    <iframe width="560" height="315" src="http://www.youtube.com/embed/VR4bnvOfDwc" frameborder="0" allowfullscreen></iframe>
  7. jem


    The point being there should be no income tax its offensive to our liberty as americans and think about the drag on our economy.

    Most of the income tax just goes to support the debt. Wipe out the debt with one massive payout and wipe out the income tax with the next.

    Then balance the budget.

    Shangri la.

    Also no more lobbyists bribing away our politicians. Poloticians can go back to working for power instead of campaign bribes.

    My name is JEM and I approve this message.
  8. Lucrum


    + 15.814 trillion and counting...
  9. Ricter


    If you're referring to the fact that your income taxes are paying for my T-bill redemptions... thank you! Please continue.