In Ancient China, Buddhist monasteries didn’t pay taxes, and periods of time throughout history saw churches paying no taxes, either. Whatever country, province, state, or region a person could have conceivably grown up in, and whatever the religion was, churches were usually exempt from paying taxes. But, what about today? What about the people today? Do churches pay taxes in modern America? Do churches have federal tax-exempt status? Some people say that the power to tax churches interferes with the free right to exercise religion.
In the U.S., one of the clearest indications that churches will always be tax-exempt is that the U.S. Supreme Court has said that if the government has the power to tax churches, then it will hurt the free exercise of religion. There is no surer way to annihilate the free exercise of religion, than to allow the government to tax it. That status is what is responsible for churches have tax-exempt status. Taxing churches would break down the separation of church and state. It creates an insulation separating church and state when there is no power to tax. There is no surer way to separate religion and freedom than to tax it.
If the government had the power to tax churches, it could punish those views it didn’t find good. It could tax some churches and not others. It could tax churches that had one viewpoint and disregarded another.
Church leaders, however, are prevented from speaking from the pulpit in a negative way about politicians, or favorably, as the case may be. They are prohibited from doing so, and they may face a loss of their tax exemption privilege status if they do so. It is a good idea for churches to stay separated from state, and for them to acknowledge their tax-exemption status by not going through with anything that could undermine their status. They should not allow pastors or church leaders to speak politically from the pulpit. There are restrictions on pastors speaking about certain politicians in light of Scripture.
Although they may not need to pay taxes or fill out tax forms, they are still facing the obstacles of raising money for their cause. Most of their donations are received without any sort of taxation from the IRS.
The separation between church and state is reinforced when there is no power to tax. Even though it might seem like a good idea to tax churches, because they should be paying like everyone else, it is still hard to tax churches because there is a wall between church and state, and that wall is there to guarantee the separation of church and state.