The Status of Tax Exemption for Churches

One question that always arises in the tax debate is whether Congress should remove tax-exempt status of churches. The short answer is no, however, this answer is not complete. The answer is that while it is unlikely that Congress will remove the tax-exempt status, but the government might still curtail the benefits that a person could receive from doing this or the benefits might be different. If these changes are to occur, they probably will occur after the election and if President Obama is re-elected. 

President Obama has proposed several different provisions that could change the benefits for people who donate to charitable organizations, such as churches. He has proposed placing a cap upon the value of deductions made by upper-income Americans, and would like to re-enact the “Pease” provision. This provision will limit the amount of itemized deductions a taxpayer can take, which could result in adding millions to taxes of upper-income Americans. 

See Tom Herman, The Fate of Charitable Deductions, Wall Street Journal, July 28, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.