Today in 1970: The Supreme Court upholds religious tax exemptions

May 4, 2012

Today in Legal HistoryEarlier this year, the Obama administration came under fire from religious groups for implementing a rule pursuant to the Affordable Care Act (ACA) requiring group health plans and health insurance issuers that receive federal funds to cover contraception.

The rule became popularly known as the “contraception mandate,” and many religious groups claimed that the Obama administration had “declared war on religion” through the rule.

This perception of a “declaration of war” is ironic because the requirements would have applied to religious organizations only so long as they accepted federal funds.

Instead, it seems, some of these organizations appear to expect federal money with few, if any, conditions attached.

Because religious organizations do not pay federal taxes, however, they do not contribute to the coffers from which these federal funds are drawn.

Rather, the contributions that they receive come from those individuals and organizations that actually pay federal taxes.

This means, in turn, that these organizations expect the government to compel citizens, through taxes, to make religious donations.

Many of you might be wondering whether this arrangement runs afoul of the Establishment Clause found in the First Amendment to the U.S. Constitution that prohibits the government’s establishment of religion.

However, that argument was used in a U.S. Supreme Court case by a citizen attempting to invalidate laws that exempted religious organizations from property taxes, and it wasn’t successful.

That case – Walz v. Tax Commission of the City of New York – was decided 42 years ago today on May 4, 1970.

The case was brought by Frederick Walz, a property owner, who sought to invalidate as unconstitutional New York laws that granted property tax exemptions to religious and charitable organizations.

As mentioned above, the essence of Walz’s argument was that the New York City Tax Commission’s grant of an exemption to church property indirectly requires him to make a contribution to religious bodies.

Specifically, because these religious organizations avail themselves of the same tax-funded services – such as police and fire protection – that taxpayers do, Walz and other taxpayers are left paying for the churches’ use of these services.

In essence, Walz argued that all taxpayers make contributions to religious organizations every time any such organization uses any government service or takes any government funds.

The Supreme Court didn’t actually disagree with Walz’s assessment of the tax system – taxpayers were, and continue today to subsidize religious bodies’ uses of government services.

The Supreme Court disagreed with Walz on whether this was a violation of the Constitution’s Establishment Clause.

For several pages, the Court cited cases such as Everson v. Board of Education (which upheld state funding of transportation to parochial schools) and waxed on the philosophy behind the Establishment clause.

At the end, the Court reasoned that it didn’t really upset the Establishment clause to make taxpayers finance the use of government services and funds by religious institutions, since it exempted religious institutions uniformly, and didn’t really force religion on anyone.

Justice William O Douglas

Justice William O. Douglas

Justice William O. Douglas alone dissented, finding that “one of the best ways to ‘establish’ one or more religions is to subsidize them, which a tax exemption does,” and Douglas went on for quite awhile in arguing that point.

Strictly speaking, Douglas was probably right.

Why didn’t the majority see it this way?

There may be a variety of reasons, but a likely motive behind the Walz holding and a string of other similarly decided cases is the government’s protectiveness of religious institutions.

Almost without exception, the Supreme Court will side with religious bodies unless doing so would allow a clear, unmistakable violation of the Establishment Clause; cases today continue this trend.

With this in mind, it doesn’t seem logical to suggest that the government is contemplating a “war on religion.”

At best, the “contraception mandate” could be characterized as the government “being a little less cuddly than usual with religion.”