No Tax on Religion

The value of U.S. church and synagogue property has grown to an estimated $102 billion--all of it tax exempt. New York City alone forgives $36 million a year in potential taxes on church property. Though such exemptions are as old as the republic, even some churchmen have lately questioned the practice. Critics view it as an indirect subsidy that hikes taxes for other property owners and violates the First Amendment because it amounts to state support of religion.

The Supreme Court has consistently rebuffed attempts to raise the issue including an appeal brought by Atheist Madalyn Murray O'Hair in 1966. But last week the court finally spoke. And by a resounding vote of 7 to 1, it upheld tax exemption for churches.

Strict Construction. The new challenge was launched three years ago by Frederick Walz, an elderly New York lawyer who is so reclusive that he refuses to be photographed and conducted his entire case by mail and phone calls. To become a landowner, Walz bought .0146 of a weed-choked acre on Staten Island. When the city billed him for taxes of $5.24 on the lot's $100 value, he filed a suit to prevent New York from granting tax exemptions to churches, claiming that the city was using part of his money to support them. He was a Christian, he added, but "not a member of any religious organization, rejecting them as hostile." By the time his case reached the high court, it had drawn the opposition not only of New York City but of all three major faiths.

Only Justice William O. Douglas agreed with Walz. Summarizing his dissent from the bench, Douglas wryly urged a "strict construction" of the First Amendment's ban on official establishment of religion. In his view, tax exemption subverts the ban because it favors religion at the expense of atheistic or agnostic groups. The result, said Douglas, violates the constitutional command of Government neutrality "between believers and nonbelievers."

Middle Course. Speaking for the court majority, Chief Justice Warren E. Burger relied largely on the clear fact that church exemption is a U.S. tradition. He admitted that exemption "necessarily operates to afford an indirect economic benefit" but he felt that the practice does not produce the kind of governmental "sponsorship, financial support and active involvement" that the First Amendment's drafters intended to guard against. It is no more an aid to religious organizations than other forms of assistance permitted by the court, including the use of state funds to pay for the busing of parochial school pupils and some of their textbooks. If the Government did tax churches, Burger argued, it would become even more involved in religion as tax collectors and clergymen haggled over such matters as "tax valuation of church property, tax liens, tax foreclosures, and the direct confrontations and conflicts that follow in the train of those legal processes."

Without specifically rebuffing the claims of atheists, Burger said that the present arrangement is a workable middle course between "either governmentally established religion or governmental interference with religion."

The decision will not deter the several Protestant denominations and Jewish groups that have recently begun urging their members to pay voluntary property taxes by reimbursing their communities for fire and police protection. However, the court's action did leave hanging two other emerging church-state issues.

A number of churches own television stations, rental properties and even girdle factories whose only religious purpose is to produce church income. Even religious groups which oppose blanket property taxes on churches have recently gone on record as favoring selective taxes on the income of these "unrelated" businesses, and several suits challenging such tax-sheltered enterprises are now making their way through lower courts.

More important, the high court has agreed to consider a case involving the effort of the Pennsylvania legislature to aid hard-pressed parochial and other private schools with grants for teachers' salaries and teaching aids (TIME, Dec. 19, 1969). Douglas particularly was troubled by this trend. As he sees it, "the extent to which [churches] are feeding from the public trough in a variety of forms is alarming." But the majority of the Justices, in upholding the "indirect" economic benefit of exemption, hinted that they too might have doubts about more direct payments. Said Burger: "Obviously a direct money subsidy would be a relationship pregnant with involvement."

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