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Church Tax Exemption

November 11, 1964

Report Outline
Derate About Tax Exemption for Churches
Extent of Exemptions and of Holdings
Questions Involved in Special Treatment

Derate About Tax Exemption for Churches

Most people accept without question the exemption of church income and property from federal, state and local taxes. Few persons realize, however, that the customary exemption may extend to enterprises and property devoted to purposes far removed from the primary mission of churches. A number of leading clergymen are now asking whether churches should not voluntarily relinquish some of the benefits of tax exemption, not only as a social and moral duty but also to forestall accusations that they have fallen under the influence of mercenary considerations.

Tax exemption is coming to the fore of church deliberations at a time when the constitutional basis of the exemption is being challenged in the courts. In view of recent Supreme Court decisions sharpening the constitutional line separating church and state, the prospect that church tax exemptions may be curtailed is no longer so remote as it once seemed. Although not many churchmen would go so far as to advocate complete withdrawal of exemptions, the feeling is growing that the benefits deriving from the privilege have become too great for the ultimate good of the community or the church.

Challenging of Church Tax Exemptions in Courts

The atheist groups which supported the attack by Madalyn Murray of Baltimore on Bible-reading and prayer-reciting in public schools are now attacking the constitutionality of various forms of tax exemption extended to churches. A taxpayer's suit taking exception to the exemption from federal income tax of church receipts from business enterprises was filed in federal district court in Baltimore in mid-August by Lemoin Cree, atheist publisher, who apparently has succeeded Mrs. Murray as leader of the Baltimore atheist group. Several months earlier, the Murray-Cree group had filed suit in a Baltimore court at-attacking exemption of church real estate from local property taxes.

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