Taxing the Church

Religion, Exemptions, Entanglement, and the Constitution

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Edward A. Zelinsky
  • Oxford, England: 
    Oxford University Press
    , October
     280 pages.
     For other formats: Link to Publisher's Website.


Edward Zelinsky’s Taxing the Church is a comprehensive, informative, and balanced contribution about a perennial church-state issue, one that waxes and wanes in controversy. While written primarily for an audience of law and policy makers, it is sufficiently approachable for a lay audience. Indeed, clergy and scholars of religion-in-society may find it a useful resource, even if they skip some of the legal discussions.

Zelinsky is a tax scholar, not a church-state scholar. However, it is clear from his work that he has a keen understanding of religious organizational structure and church-state jurisprudence. He explains in detail the variety, complexity, and diversity of tax exemptions at the federal and state levels, detailing the differences between property taxes, sales taxes, charitable contributions, and unemployment insurance. He also helpfully distinguishes those types of tax exemptions that apply to charitable nonprofits and eleemosynary institutions generally from those that apply solely to churches and their closely held auxiliaries, a point that any reader of his book needs to understand. It is this latter category—religious specific exemptions—that the majority of Zelinsky’s work focuses on.

Taxing the Church is efficiently organized, with the first half of the book outlining the variety and diversity of exemption schemes, and the second half taking a more normative stance, making an argument to maintain most existing religion-specific exemptions. While the purpose of the first part is explain the landscape, it also seeks to dispel some popular myths. First, there is no uniformity among states and the federal government when it comes to granting exemptions. This means that despite what some people may believe, exemptions exist at the grace of legislatures and are not mandated by the Constitution of the United States. Second, even though there is a “broad consensus” that churches should enjoy some form of tax exemption (e.g., property tax exemptions for houses of worship), that consensus breaks down when exemptions are afforded to a swath of religious auxiliaries—schools, hospitals, nursing and retirement homes, publishing houses—particularly when those latter entities compete with nonreligious equivalencies. Another myth is that churches and their activities are universally exempt: Zelinsky argues that “sectarian institutions pay more taxes than many believe” (xiv).

One theme that runs throughout the book is the tension that exists regarding the constitutionality of religious tax exemptions. As noted, the Supreme Court has never held that churches are constitutionally entitled to exemptions under the free exercise clause of the First Amendment. However, legislative bodies can permissibly accommodate churches via an exemption, and in fact an accommodation may serve an important constitutional value of limiting government oversight and entanglement with religion. Adding to the tension, the seminal Supreme Court case that upheld property tax exemptions given to churches, Walz v. Tax Commission (1970), involved an exemption for charities generally—not churches solely—and twenty years later the Court struck down a religion-specific sales tax exemption for religious magazines. So is an exemption for churches a permissible accommodation (and an entanglement reducing mechanism) or is it a subsidy that violates the First Amendment’s establishment clause? 

Zelinsky guides the reader through these jurisprudential minefields. In the latter half of the work, he makes a strong argument for exemptions based on entanglement concerns. As he explains, to either tax or exempt raises different entanglement questions, but the greater constitutional danger lies in assessors examining and evaluating faith-driven decision making. He does not argue for blanket exemptions on that ground, however: “Some taxes entail more church-state entanglement than do other taxes” (156). So a requirement that a religious organization pay a tax on the sale of a commodity—as the Court famously ruled in upholding a California sales tax on the sale of Bibles at a Jimmy Swaggart revival—may actually raise fewer entanglement concerns. Still, for Zelinsky, “the minimization of church-state entanglement should be an important, often controlling, goal” for lawmakers to consider when drafting such statutes (156).

One downside of Taxing the Church’s emphasis on entanglement is that it gives short shrift to the issue of subsidies. Justices on the Court have struggled with this question, though most have rejected the argument that an exemption has the same effect as a government subsidy. As Zelinsky correctly observes, it “is only compelling to declare a tax exemption a subsidy after identifying the normative tax base from which such exemption is a departure. There is no subsidy if the activity excluded from taxation should not have been taxed in the first place” (3). While this is a sufficient answer for tax experts and policy makers, it still begs the question whether the extensive system of tax exemption actually benefits the religious missions of churches. As Zelinsky acknowledges, churches do not desire exemptions solely to reduce government entanglement but do so also for their financial benefit.

Taxing the Church concludes with what may be the most interesting discussion for the lay audience: the entanglement between church tax exemptions and political advocacy. Charities, including religious institutions (IRC section 501(c)(3) entities) are prohibited from engaging in any substantial legislative activity and strictly prohibited from engaging in partisan electoral activity. This prohibits churches and their leaders from endorsing or opposing candidates for elected office or participating in any campaign activities (this rule resulted in an evangelical church having its federal tax exemption revoked after it took out newspaper advertisements opposing the election of Bill Clinton as president). Even though this rule is rarely enforced, it has become controversial among religious and political conservatives who claim that it infringes on the former’s free speech rights and the role of the church to bear prophetic witness about political matters. Zelinsky proposes a solution to this controversy by advocating a distinction between internal communications (e.g., a minister to her congregation) and external communications, thus allowing churches to fulfill some of their prophetic role. Although this proposal is appealing, it faces problems that Zelinsky acknowledges: how to define a congregation, how to deal with television ministries, church web pages, the internet, social media communications, and the church’s duty to preach to the “unconverted” and to call public officials to accountability. 

All in all, Taxing the Church provides a thoughtful and comprehensive discussion of the numerous issues arising out of religious tax exemptions.

About the Reviewer(s): 

Steven Green is Professor of Law & Religion at Willamette University.

Date of Review: 
September 17, 2018
About the Author(s)/Editor(s)/Translator(s): 

Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University where he lectures on tax law. He is a graduate of Yale College, Yale Law School, and the Yale Graduate School. Professor Zelinsky's articles have appeared in the nation's most well-known legal journals including the Harvard Law Review, the Yale Law Journal, and the Columbia Law Review. He is the author of The Origins of the Ownership Society: How the Defined Contribution Paradigm Changed America (Oxford University Press, 2007), and he is a regular contributor to the OUP blog.


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