Before we begin, I'd like to point out that I'm a God-fearing American who is for the tax exemption of churches, under certain circumstances. Churches have done wonderful things for millions of people in this great country and the world, myself included.
I was raised in the church, which means a lot of different things to different people. For me, it meant my whole social world revolved around church events, which I attended two to three times a week as a youth.
My world was small back then. I attended a church of probably around 100 members (which I thought was massive) on the Virginia-West Virginia border, in a more rural part of the Washington D.C. area. At the time, I could never imagine a church much bigger, or even one that could generate revenue in the tens of millions.
Enter megachurches, which are mostly Protestant and attract over 2,000 patrons each week. There are about 1,300 megachurches in America, up from 70 just 40 years ago. These organizations can hold congregations in the tens of thousands and operate under tax exempt status because of their religious affiliation.
This week, Hurricane Harvey in Houston brought the biggest megachurch in America, Lakewood Church, into the national spotlight. During this tragic storm, Lakewood, which seats 16,800 people (roughly the size of an NBA arena), refused to open its doors to the public, drawing the wrath of more than a few pissed off Houstonians.
Lakewood's pastor, Joel Osteen, drew the brunt of this criticism, accused of rejecting those in desperate need of shelter during a massive storm….which isn't the most Christian thing to do. Neither was lying about flooding at the church when it had in fact not been affected.
But this isn't about how Osteen did the wrong thing (this is a finance website after all). It's about how much freaking money this guy makes. His net worth was reported at $55 million in 2012, which he claims comes mostly from his book sales of Living Your Best Life, a New York Times Best Seller from 2004. Furthermore, Lakewood annually reports revenues of $70 million in donations from their congregation of over 35,000-50,000 that attend every week and the additional 7 million online viewers.
Again... not trying to roast Osteen and Lakewood (they eventually opened their doors, albeit only after the backlash), but how does a company that annually grosses more than a few companies on the NYSE get off without paying a single dime to Uncle Sam?
The first recorded tax-exempt status goes all the way back to 306 A.D. when the Roman Empire under Emperor Constantine, a converted Christian, granted all churches tax exempt status. Here in America, church tax exemption was officially passed in 1894, after years of unofficial tax exemption up to that point. Religious organizations are not charged property tax in any state and donations made to these groups are tax deductible.
It's interesting to hear both sides of the argument on the tax-exempt status of churches because they claim the same outcome: separation of church and state. Proponents of tax exemption say that without government taxation, churches are allowed to provide services to the community unfettered by government regulation. Those against it argue the opposite, stating that nowhere in the Constitution does it exempt churches from taxation, thus granting them a privilege over secular organizations.
While those arguments both have valid points, the numbers paint an interesting picture against the exemption of churches. According to White House senior policy Analyst Jeff Schweitzer, the U.S. government loses between $300-500 billion in property taxes alone from these untaxed organizations. In New York City, more than 9,500 churches cost the government $627 million in untaxed property according to New York's nonpartisan Independent Budget Office.
Churches receive their income mostly by donations from the congregation. Obviously, a church in a wealthy Los Angeles suburb is more likely to receive larger donations from their congregation than one in rural Mississippi. Furthermore, attendees of megachurches (due to the probability that a megachurch would be located in or around a city, and thus higher wages) make far more money than those who don't attend megachurches, making them more apt to donate. In fact, 26% of megachurch attendees make over $100K per year, compared to 15% of attendees of a typical congregation.
90% of churches don't receive over 350 people in weekly attendance, with another 50% not even receiving 100 attendees. So, with an average revenue of $6.5 million for megachurches, why haven't we broken this into a new tier for taxation? Or at least required megachurches to get out into the community and spend a certain amount of revenue on service related projects rather than building more elaborate churches?
Smaller churches need tax-exempt status to survive. The average pastor in America makes a modest $28,000 (and probably has to work another job), while the average employee of a megachurch makes a comfortable $147,000. How are these two comparable entities when one is living below the poverty line while the other is upper middle class? The model where megachurches aren't taxed is clearly outdated, maybe simply because there weren't that many around 40 years ago.
If we tax the wealthiest Americans more, then the same should be true of churches, too. And while I believe the vast majority of churches should receive tax exemption status, if your pastor’s house looks like this then you should probably give back to the government as well.
Tax exemption is something that shouldn't just be handed out because you claim to be a religious organization. As a megachurch, you should have to earn tax-exempt status by providing services, relief, and yes, shelter in times of need.
“America’s Biggest Megachurches.” 2017. Accessed August 31. https://www.forbes.com/2009/06/26/americas-biggest-megachurches-business-megachurches.html.
“Average Pastor Salaries in United States Churches.” 2017. Accessed August 31. http://www.patheos.com/blogs/christiancrier/2013/12/15/average-pastor-salaries-in-united-states-churches/.
“Churches and Taxes - ProCon.org.” 2017. Accessed August 31. https://churchesandtaxes.procon.org/.
“One Key Reason Most Churches Do Not Exceed 350 in Average Attendance.” 2017. Accessed August 31. http://thomrainer.com/2015/03/one-key-reason-churches-exceed-350-average-attendance/.
“Why Did America’s Biggest Megachurch Take so Long to Shelter Harvey Victims? | US News | The Guardian.” 2017. Accessed August 31. https://www.theguardian.com/us-news/2017/aug/30/lakewood-church-joel-osteen-hurricane-harvey.