As religious organizations of all faiths stretch their concept of mission far beyond traditional worship, should their traditional tax exemptions expand as well? Increasingly, government at all levels is answering yes.
The property tax exemption is one of the oldest tax breaks granted to religious organizations, but it is not the only one. Lawmakers and judges have also approved what amounts to special tax treatment for religious organizations and some of their employees, including exemptions on personal-income and payroll taxes, and have made it easier for them to get tax-exempt construction loans for purely religious projects.
Like the exemptions from federal and state regulations that have proliferated for religious groups in recent years, these tax breaks are widely defended both as an acknowledgment of religion’s contributions to society and as a barrier to unjustified government limitations on the liberty that religious organizations enjoy under the First Amendment.
But in some communities like South Bend, tolerance of religious tax breaks is fraying as local governments struggle to provide basic services with limited resources.