Christmas is the season for gift-giving as Christians around the world celebrate Jesus’ birth. More broadly, all religions within the United States enjoy the gift of tax exemption. But just how far does tax exemption extend – and is it truly a gift, or a right? Does tax exemption extend only under Section 501(c)(3)? What other taxes also affect churches? Tax scholar and law professor Edward Zelinsky answers these questions in the newly published book Taxing the Church (Oxford University Press 2017), addressing the diversity of which houses of worship are taxed, the normative question of whether they should be taxed, and provides a fourfold framework for understanding church taxation.
In lawyer David Simon’s call to abolish property tax exemption for “rich” nonprofits, he argues stridently that Illinois property tax exemptions reflect another example of unfair privileges, this time for “wealthy” nonprofits like the University of Chicago and Northwestern University. He thus advocates for granting property tax exemptions only to nonprofits owning property valued at less than a million dollars. His bright-line rule seemingly eliminates the highly problematic political schemes such as those found in PILOTs (“Payments in Lieu of Taxation”) which some state and local governments have adopted. But his commentary ignores the long history of nonprofit tax exemptions, the extensive societal benefits (including both financial and intangible benefits) resulting from such exemptions, and other key policy considerations.
The Illinois appellate courts continue grappling with a new statute intended to bring clarity to nonprofit hospitals’ qualification for property tax exemption. May such qualification be established through a certain amount of charitable activities, shown in financial terms? These two cases demonstrate that charitable property use – not just charitable ownership and activities – is a nonnegotiable requirement under the Illinois Constitution for all nonprofit property owners.