Your Taxes Are Higher Because Religion Pays Nothing

Mike takes a drive through his hometown and counts the true cost of religious property tax exemptions. In just one ZIP code, he identifies 7 religious parcels representing $31 million in assessed value—all exempt from property tax.

Drawing on data from the Lincoln Institute of Land Policy, the IRS and his local tax assessor, Mike explores how this "tax base erosion" shifts the financial burden of local services onto residents. He challenges the "charity defense," notes the lack of IRS Form 990 reporting for churches, and argues that public subsidies should require public evidence of community benefit.

Links:

IRS Exempt Organizations 

Research Report: How Secular Humanists (and Everyone Else) Subsidize Religion in the United States

Lincoln Institute of Land Policy: "Reexamining the Property Tax Exemption"

Lincoln Institute of Land Policy: "Significant Features of the Property Tax" 

Listener Question:

Do you think churches should be required to file public financial disclosures (Form 990) just like secular charities?

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Transcript

Michael Smithgall 0:00

Recently, I was back in my hometown and I was driving between the home that I own down there and a friend's house. Now, this is a pretty standard southern town, good neighborhoods, decent schools. It's a typical drive. Not long, just uh a mile or two through the neighborhood. But once you start looking for something, you can't stop seeing it. In that short drive between my driveway and his driveway, I counted five different churches. Now, I'm not talking about storefront chapels and a strip mall. I'm talking about land, big land, lots, uh, prime real estate on main roads, paved parking lots that sit mostly empty six days a week, manicured lawns, large buildings. And as I drove past them, I didn't get angry. I didn't get mad about theology or start debating the existence of God in my head, but I did start doing the math. Every time my tires hit a pothole, I thought about who pays to fix that. Every time I passed a fire station, I thought about who pays the salaries inside. And I realized something. I'm paying for the road in front of that church. You're paying for the fire truck that will show up if that church catches fire. The church is paying nothing. Because under our current system, that land is invisible to the tax collector. It has value, it uses services, but it contributes zero dollars to the local budget. Now, this isn't a question of spiritual value, it's a question of math. And right now, the math says you're subsidizing a bill that religion isn't paying. All right, thanks for tuning in. I'm Mike Smithgall, the unelected mayor of Atheistville, and this is today's mic drop. When people hear the phrase tax exempt church, most imagine income tax, tithing, collection plates. But that's not where the real impact shows up. The real impact comes from property tax. Property tax is the backbone of local government funding. It pays for schools and police and fire protection, sanitation, libraries, infrastructure. Unlike federal budgets, local governments don't run on debt. They run on what sits on the land and whether it's taxable. Religious institutions in the United States are generally exempt from property taxes if their land is used primarily for religious purposes. That exemption isn't temporary. It doesn't scale with a frequency of use. It doesn't require periodic renewal tied to outcomes. Once it's granted, it's effectively permanent. According to the Lincoln Institute of Land Policy, tax exempt property, including religious property, removes enormous amounts of assessed value from local tax bases every year. In major metropolitan areas, that represents billions of dollars in untaxed land. Now, this isn't about hostility towards religion, so calm down. It's about understanding how the system functions. If land is exempt, revenue can't be collected from it. Everything else flows from that fact. So let me make this concrete without turning it into an accounting exercise. I decided to look at property tax records in my old neighborhood. I cross-referenced the IRS database of religious organizations with the county property appraiser's office to see which organizations owned land. In my zip code, my old zip code, where I have a house, I found seven parcels owned by religious institutions. Some parcels have multiple congregations or ministries operating in them. But what matters for property tax is the land itself. According to the county appraiser, those seven parcels represent roughly $31 million in assessed value, all of it exempt from property tax. Let me be very clear about what I'm not saying. I'm not alleging wrongdoing. I'm not saying the church is doing anything wrong. They are following the laws that we have in place. But I am pointing out the flaw and I'm showing the scale of the problem. Now, my neighborhood isn't a massive area. It's about 11.5 square miles, roughly 27,000 people. The median household income is just over $90,000, and about 80% of the households are owner occupied. That means homeowners carry most of the property tax burden. With tens of millions of dollars in assessed value are removed from the tax base in a single zip code, the burden doesn't disappear. It just shifts onto the remaining taxable properties, most of which, in this case, are homes. Here's the part people tend to skip. When property tax revenue falls short, local governments have three options. They raise rates on taxable property, they reduce services, or they do a combination of both. There is no fourth option. Research from the Lincoln Institute of Land Policy makes this explicit. Tax exemptions don't reduce the cost to government, they just redistribute it. Homeowners, renters, and small businesses absorb the difference, either through higher taxes or diminished services. And remember, renters aren't insulated from this. Property taxes are baked into rent. I'm a landlord. And when landlords pay more, that gets passed on to the tenant in the form of higher rent. So even if you've never attended a church, you still help fund the gap created by exempt land. All right, quick pause. If you haven't subscribed yet, what are you waiting for? I would love to have you join the community here in Atheistville. We aren't a debate channel that relies on who can shout the loudest. We aren't here to tell people that they shouldn't be religious. We're simply trying to create a space where reason and compassion win the day. So if you want more civil dialogue and less screaming at each other, then subscribe. And leave me a comment, even if you disagree with me. If you have a logical rebuttal and you're civil, I am more than happy to discuss that. We may not change each other's minds, but maybe we can better understand the other's perspective. And that helps us get along better. All right, let's get back to it. This is where the issue becomes civic versus emotional. If I start a secular nonprofit to feed the homeless, I have to jump through hoops. I have to apply for a 501c3 status, and more importantly, I have to file an IRS form 990 every single year. That document is public. Anybody can look it up. It lists my revenue, it lists my expenses, it lists the salaries of my top executives, it lists exactly how much money went to program services versus administration. It's a very valuable document for evaluating charities. If I stop feeding the homeless and I start buying private jets, the IRS can revoke my status. The public can see that I am failing to provide a benefit. Churches, on the other hand, don't have to file a Form 990. Research on nonprofit tax policy points this distinction clearly. Religious institutions receive broad property tax exemptions without standardized reporting tied to measurable public benefit. That doesn't mean that churches do nothing good. Many do. The issue is the exemption isn't conditional on evidence. A food bank must show how many people it serves. An animal rescue must show how many animals it howled or adopted out. A shelter must show capacity in use. A church doesn't need to demonstrate any of that to maintain its property tax exemption. At this point, a fair objection usually comes up. What about other charities? This is where the precision matters. Many secular charities receive tax exemptions because they provide measurable public benefit. These exemptions are justified by evidence. If the charity stops performing its mission, the exemption can be challenged. Church exemptions operate differently. They're tied to classifications, not outcomes. Let's go back to the animal rescue. The animal rescue that houses and feeds animals can document how many animals it helped every year, how much it spends, and how it contributes measurable public benefit. A religious institution, by law, may hold tax-exempt property without reporting how it serves the broader community. Now, two things can be true at the same time. You can support animal rescue, shelters, clinics, and food programs while still questioning unconditional exemptions for religious institutions that aren't required to demonstrate comparable public benefit. That's not an attack on religion. That's simply asking for some fairness and some consistency. So here's where we end up. That drive I mentioned at the start, it wasn't unique. You could do that same exercise in almost any town in America and find the same pattern: valuable land, essential services, permanent exemptions, and a cost that shifts quietly onto everyone else. That $31 million in my zip code isn't an outlier. It's how the system works everywhere. And that brings us up to the question that we keep avoiding. If tax exemption is a public subsidy, and it is, what level of transparency and evidence should come with it? We don't ask that question because we've been taught that asking it somehow threatens religious freedom. But paying taxes isn't persecution. Every other business and person pays taxes. And requiring evidence of public benefit isn't hostility. It's a standard we apply to all organizations that want public support. The system we have treats religious exemptions as automatic and unconditional. The question is whether that's the system we should keep. Okay, that's my two cents, unblessed, unfiltered, agree or disagree, but that's what I got for you today. At the end of the day, this episode comes down to one idea. Tax exemptions are public subsidies. And public subsidies deserve public transparency and public accountability. What matters here is perspective. You don't need to oppose religion to ask for fairness. You don't need anger to insist on evidence. A healthy civic society applies the same standards to everyone. All right, I'm Mike SmithGolf, and I'll catch you on the next one. Thanks for tuning in. I really hope you enjoyed that. If you have a question for me, make sure you drop a comment. We'd love to hear from you. Hey, and do me a favor like and subscribe. That really helps us out and it helps us bring you more conversations from beyond belief. And in the meantime, take care and remember reason and compassion go a very long way.