Issues

Pay Attention America – Puerto Rico Reins In Church Tax-Exempt Status

* The following is an opinion column by RMuse *

It’s possible that some Americans’ memory is good enough to recall the Republican Party’s Great Recession and its aftermath when instead of bringing in more revenue, they only cut spending on crucial services. In fact, in several Republican states that are drowning in debt and suffering monthly revenue shortfalls, Republicans only cut more services and resist any attempt to bring in revenue. It was, and still is, an outrage that Republicans are willing to cut spending for the people during an economic downturn, but they never consider simply ending subsidies to special interests that would serve the purpose of bringing in revenue.

American taxpayers unwittingly dole out inordinate amounts of money every year to organizations and corporations that do not need more money, and Republicans regularly cut spending for domestic programs to fund subsidies for their special friends. Of all the “special interest” subsidies that Republicans, and likely many Democrats, will never consider cutting are the religious special interests, or in street parlance “the churches.” At the last approximation, in 2011 American taxpayers furnished churches with well over $71 Billion every year while Republicans cut social programs due to a lack of revenue.

One might think that an intelligent nation’s solution to bring in revenue would be to stop doling out free taxpayer money, and while America is terrified of ending welfare to religious organizations, Puerto Rico is showing courage and beginning to rein in churches’ tax exemption.

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Puerto Rico, an American territory, is like Kansas in the midst of a “spiraling debt crisis” and is taking “several drastic steps” to bring in much-needed revenue. Thus far it has cut education spending, raised sales tax to the highest level in America, and increased the cost of essential utilities like water and electricity. Still, those steps alone will not suffice and unlike America where church welfare is sacrosanct, Puerto Rico’s Treasury is “cracking down on churches that abuse tax-exempt status.”

It is true it is not putting an end to church welfare, but it is a monumental step forward for an American territory. If any state or congressional representative even suggested looking at churches’ tax exempt status, they would be summarily drawn and quartered; likely on the steps of the nation’s capital.

According to Primera Hora, a Puerto Rican newspaper, the Secretary of the Treasury Jan Zaragoza announced a plan to begin auditing churches beginning this month. Mr. Zaragoza said the “unusual” tactic is the continuation of a program that began investigating over 40 so-called “non-profit” religious organizations last year. Now the Treasury Department is turning its undivided attention to “actual churches” Mr. Zaragoza says are operating as “religious” non-profits but are still posting record profits from business endeavors without paying taxes; it sounds like every church in America.

Now, many Americans have noted ad nauseam that America has a problem of churches operating as a business, and making profits, and yet are exempt from paying tax on business profits. Unless an Americans’ business is located offshore, they have to pay tax on their income and profits. Mr. Zaragoza related the same issue in Puerto Rico when the country is drowning in debt. Zaragoza said,

The problem is that there are churches that are family businesses and where people are making a profit. You can have a church for profit, like any other, just like a shoe store. You can operate a church as a for-profit entity, but every year you should file returns with your profits and pay.”

As one might suspect from religious organizations, many church groups expressed frustration and outrage at the Treasury Department’s new tactic. Zaragoza and many other could not care less how outraged the religious freeloaders are and charge that “several religious organizations refuse to comply with Puerto Rico’s Treasury Department regulations and standards required to accrue full tax-exempt status.” Zaragoza continued,

The message we’re sending here is that we have a responsibility and will oversee all groups. This is not an attempt to demonize anyone. On the contrary, we are not giving privilege to anyone. These organizations think that by just registering as a non-profit organization they gain automatic rights to tax exemptions. They get incorporated and begin operations without ever requesting tax exemptions. They have spent years not paying taxes. Now they have to make retroactive payments.”

Of course a church is going to complain if they have to make payments of  any kind; they are used to getting everything, including city, county, state, and national services for free just because they are churches. It is why in America the idea of challenging the tax-exempt status of churches is considered the work of Satan, an affront to god, and patently un-American. American religious institutions (churches) are given free rein to operate for a profit without paying taxes, filing or keeping financial records, or submit to any government supervision.

Technically, churches in ‘mainland’ America are prohibited from doing ‘business’ as a for-profit company, or from taking and promoting “explicitly political positions.” But this is America where an unwritten, but universally-understood, law says questioning a church is a mortal sin; expecting the Internal Revenue Service (IRS) to enforce such laws is bordering on apostasy and the religious right knows it has the upper hand; government officials are terrified of evangelicals.

In fact, for the past five years nearly two thousand separate evangelical churches in all 50 states and Puerto Rico have openly dared the government to crack down on criminal houses of worship for abusing their tax exempt status and free money. In 2014 alone, there were 1,800 pastors participating in what is known as “Pulpit Freedom Sunday” by campaigning from the pulpit and endorsing Republican candidates as part of their sermons. Then, to incite the IRS to take action, the 1,800 preachers mailed their political endorsements, often with video, to the IRS daring them to do their job and apply the letter of the law and revoke their tax exempt status.

According to the Puerto Rican Treasury, the “territory” stands to gain quite a bit “from shaking down lucrative businesses masquerading as churches.” What Mr. Zaragoza did say was that this proposal to rein in churches enjoys broad support from Puerto Rican lawmakers who are desperate to alleviate the stress of the declining revenue crisis by extraordinary measures such as adopting a Value-Added Tax system (VAT) expected to inject $1.5 billion into the economy.

Zaragoza was clear that the Treasury Department was not going after ever church in the territory. He said, for example, that “the occasional sale of goods by Churches or religious organizations” are exempt from the new VAT system. But, Zaragoza said, several of the churches under investigation are doing far more than making infrequent sales selling cookies or cakes opening them up to audit and making them a potential moneymaker for a government drowning in debt and starved for tax revenue. “We hit the jackpot because we have realized that many of these organizations are businesses, and others have never requested tax exemption and still don’t pay taxes. We have realized that the potential for tax collection is very high.”

If an American territory like Puerto Rico can muster the courage to take on profit-driven and profit-making churches, then there is no reason mainland America cannot do the same thing; and much more. It would not be enough to simply ‘audit’ churches’ massive land holdings and financials, because those churches operating as profit-making businesses would certainly illegally “cook the books” as quickly as they illegally campaign from the pulpit.

The better idea is just strip tax exemption from all churches forthwith and save Americans well in excess of $80 billion (2012 figures) annually, and pour that revenue into cash-strapped city, county, and state coffers for schools, hospitals, roads, fire and police protection and myriad other services churches use but contribute nothing towards building and maintaining; they are by any definition the ultimate “takers” and “welfare queens” in America.

Americans, and their government, can learn a lot from other nations and territories regardless of how exceptional they think they or their country is. In this particular instance, America should not only learn from Puerto Rico, but from Founding Father and third President of the United States, Thomas Jefferson who saidno man shall be compelled to frequent or support any religious worship, place, or ministry whatsoever.”

What that means is that allowing churches to enjoy tax-exempt status is contrary to the Founders’ intent. Because when a church is tax exempt to the tune of $82.5 billion (2013) annually, American taxpayers are “compelled to support religious places of worship and ministries” by subsidizing tax-exemptions. It is something Puerto Rico is tackling head on and a policy that Americans should demand if for no other reason than “the potential for tax collection is very high.” If Puerto Rico can do it, there is no reason America should be left behind.

image – ThinkProgress

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