Religious endowments and investment accounts total in the hundreds of billions of dollars in the U.S.. Just how much money religious organizations have is hard to tell, as churches are not required to report such information. However, the net worth of some well-known pastors, like Kenneth Copeland and Pat Robertson, are estimated to run into the hundreds of millions of dollars.
Religious organizations pay no sales tax. This means that, when representatives of a religious entity make a purchase – office supplies, cars or travel, for example – they are exempted from whatever the local sales tax is in that area. They also pay no income taxes for businesses they own, if they can show that the business furthers the objectives of the religion. For example, a bookstore that sells religious books would be exempt.
Religious organizations may pay employment taxes for their employees. However, there are exceptions built into the tax code here as well. Clergy and members of religious orders are the only citizens who can opt out of paying Self-Employed Contributions Act taxes, which are 15.3% taxes on income for self-employed individuals that pay for Social Security and other federal benefits.
If religious clergy opt out of the SECA tax, they cannot receive Social Security benefits. Clergy can also deduct the upkeep costs of their “parsonage” – their home or apartment – from their taxable income.
Finally, religious organizations pay no property taxes. Property taxes are primarily used in the U.S. to fund local services like firefighting, emergency medical services and police departments, as well as schools and other infrastructure, all of which religious organizations use.
Some municipalities make information on property taxes publicly available, so it is relatively easy to work out the cost of this tax exemption to local communities.
I looked at Manatee County in Florida as an example. Manatee County is a midsize county in Florida with just over 300,000 citizens living in a mixture of rural and urban areas. Recent data suggests that Manatee County is close to the national average when it comes to the religious makeup of its residents. Finally, Florida property values and the cost of living rank almost exactly in the middle of all U.S. states, making Manatee County a fairly representative illustration of the nation generally.
Manatee County’s public portal indicates which properties are classified as churches and are therefore exempt from “ad valorem” taxes – those based on the assessed value of the property – and other property taxes. By downloading the “just market values” for the 360 properties classified as having a religious exemption, I was able to work out that their combined value was $406.7 million. If they paid the standard property taxes required of both commercial and residential properties in Manatee County, they would add $8.5 million to the tax revenue of the county annually. With the county’s budget at $740million, an additional $8.5 million works out to be about 1.1% of the total. This, according to the 2022 Manatee County budget proposal, would be enough to cover the building of all three newly proposed emergency medical services stations in the county, along with upgrades of EMS equipment and its 911 service.
