Megachurch or Mega Business

Megachurch or Mega Business?

Should Megachurches Be Tax Exempt?

By Michael Stamps

The tax exempt status of churches in the United States has become so engrained in American culture that the subject of taxing churches is borderline taboo. Yet with the federal government facing a $468 billion deficit for 2015 (Davis, 2015), new sources of revenue should not be overlooked. Megachurches, as well as other religious organizations in the United States, represent a significant source of untapped revenue. Those against the taxation of churches would argue that to impose a tax on churches violates the separation of church and state. While those that want the tax exemption lifted argue that the tax exempt status afforded to religious institutions is tantamount to a federal subsidy. Regardless of where one stands on the issue, a look at the actual operations of megachurches brings into question the legitimacy of their tax exempt status.

The first colonial practices in American government were for the most part duplications of English common law, in which the church served as a function of the state. (Livingston, 2008) As recognition for the value of the services they provided and as any other agency of the state, churches were exempt from taxation. However, after the American Revolution religious leaders like Roger Williams, the Baptist founder of Rhode Island, felt that the church would be become a subordinate of the state. At the same time, leaders such as Thomas Jefferson and James Madison felt the state could become a subordinate of the church. (Peck, 1995)

To avoid either of these scenarios the Founding Fathers, in their first amendment to the Constitution stated, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” At the very least, this was designed to prevent the declaration and financial support of a national religion by the new government.

The effect of the First Amendment on churches was minimal...