Kansas to Repeal Tax Exemption for Churches?
Kansas House Bill 2549 would require churches and religious non-profit organizations such as Catholic Charities to pay the state’s 5.3 percent sales tax. As you might guess, this has caused churches, particularly the Catholic Church, to go into hyperventiliation (see story here) with the Bishops of Kansas’ four Catholic Dioceses warning that the provision will “seriously undermine the ability of religious groups to serve Kansas’ most vulnerable citizens in these very difficult times.”
So I have just a couple of observations. First, this is a repeal of exemption for the sales tax, not for the state property tax. We’re not talking Armageddon, here. Second, many states have no sales tax exemptions at all for charitable organizations; for example, California does not base its sales tax exemptions on the nature or character of the organization at all, but exempts only certain kinds of transactions. In other words, there is no blanket exemption for religious organizations. I wonder if the Catholic Bishops of Kansas have talked to their brethren in California – or perhaps the California Catholic Church doesn’t engage in poor relief because they don’t have a sales tax exemption in that state? (I’m being facetious here, folks). By the way, Georgia is considering repealing the sales tax exemption for nonprofit hospitals. I guess they will whine about the impact on the poor, too. Heaven forbid that they should cut administrators’ salaries.
Second, I have serious doubts that religious organizations should be exempt from taxation at the entity level. Churches are largely nothing more than clubs for believers, and the vast majority of the revenues taken in at the Sunday collections go to pay for expenses for upkeep of the church building and grounds, salaries for the church staff (and in many cases, the pastor) and so forth. Yes, many churches do engage in poor relief. So here’s a thought (with a hat tip to Rich Schmalbeck of Duke, who is working on an article about this idea): repeal the tax exemption for churches in all its forms (income, property, sales) and give the churches a deduction for money spent on the poor.
I’m sure the Kansas bishops would be very pleased with this outcome, which will permit them to engage in their poor relief programs free of taxation. Right? Yeah, right.
JDC