We Need To Consider Taxation of Church Owned Property

 We Need To Consider Taxation of Church Owned Property 

Please take a couple minutes to read to the end before you write me off as antireligion or some nut case with an axe to grind against religious institutions. What made perfect sense in the past no longer makes any sense in my opinion. Also, please understand from the get go, that taxing church property will have to be addressed on a national level. The City Council cannot mandate property taxes on all the churches in Lowell. 

Once upon a time, way back before the condition of our infrastructure on a local, state and national level was deplorable, it was decided to not tax church property. Back when this decision was made the only “infrastructure” were dirt roads connecting people of one locality to another. There were no paved roads, no sewer systems, no municipal water delivery, no 911 emergency services, and the fire departments consisted of everyone in town showing up with a bucket and hoping for the best. These things all cost money and with some exceptions, the infrastructure in our country is a mess. Lowell is not the only City in Michigan with terrible streets and sewers that need to be replaced. Michigan is not the only State in the Union with antiquated, crumbling bridges, roads, sewers, and water delivery systems. 

My research makes me think two things laid the foundation for not collecting property tax from churches. Churches are considered charities and do good works. Furthermore the founders wanted to keep government and church separate – remember the Pilgrims came here to get away from a National Religion. Back in the day when a church owned a building and maybe a house for the pastor, exemption from property tax was no big deal. Fast forward to today and if one takes the time to examine the massive real estate holdings of some churches it is ludicrous to maintain the status quo. 

Trinity Church main building in Manhattan

Consider Trinity Church, a member of the Episcopal Diocese of New York. The original one story Trinity Church building was constructed in 1698. The church is now in its third building, a massive multi-story facility at the corner of Wall Street and Broadway. Can you say Prime Real Estate? In addition to the church building, it is estimated that Trinity now controls an estimated six billion dollars plus of real estate in Manhattan. That would be one whopper of a property tax bill, right? On the other coast, it is estimated that the Church of Scientology owns property in just the Hollywood area with an estimated value of 400 million dollars. Taxation on that will pave some roads and fix some bridges. 

There is a large Scientology church in downtown Detroit.

The Church of Scientology in Hollywood.

Who cares about New York City and Hollywood? Okay, consider the Grand Rapids area. Not only are there plenty of pieces of church property there, it is also home to many religious based colleges. None of them pay property tax. How does this affect Joe Public? Well, what if you owned a home in an area in which one or more of these religious schools were buying up property? (This was brought to my attention by a family member several years ago.) Consider the expansion of Calvin, Aquinas and other religious schools. Every piece of land they purchase becomes tax exempt. In addition, these schools buy homes in which to house faculty and/or students on a temporary or permanent basis. They were once taxed, but are not now. 

So if you own a home in a neighborhood and two or three or six of the homes get purchased by a religious school(s) you can expect your taxes to increase. When a church or church school makes the purchase, then those properties are taken off the tax rolls. That loss of tax revenue is going to be recovered by raising taxes on surrounding property. Someone has to pay for the roads, street lights, water, sewer, police and fire departments, etc. I contend that all property served by the infrastructure in a given area should contribute taxes toward the upkeep. 

There are numerous pieces of property owned by churches in Michigan that are located on prime real estate. Think of all the various church camps on rivers, small lakes, and even on one or more of our Great Lakes. Acreage overlooking Lake Michigan is probably the closest we have to approximating the value of property in the financial district of Manhattan owned by Trinity Church. These properties are served by infrastructure of various kinds and I believe it is time to collect property tax from ALL the property in a given district in order to help pay for the infrastructure used by everyone in that district, town, city or municipality.

In my futile search to determine just how much untaxed real estate is owned by churches in Michigan I did come across some sobering numbers. The United Methodist Church estimated it owned some 50 billion in real estate nationwide in 2021. There was a big kerfuffle in Detroit in 2018 as the Catholic Archdiocese there was moving hundreds of properties it owns into “a separate real estate corporation”. This was done in an attempt to shield assets in the ongoing sex abuse scandals. There are lots of church properties listed for sale in Michigan – a quick scan found examples of non-taxed real estate selling anywhere from sixty nine thousand to 2.2 million dollars with several listed at over one million dollars on just one page. 

The Bible has something to say on the subject. After his instructions to obey those in authority, Paul wrote this to the Romans (13:6-7 New King James translation): “ For because of this you also pay taxes, for they are God’s ministers attending continually to this very thing. Render therefore to all their due: taxes to whom taxes are due, customs to whom customs, fear to whom fear, honor to whom honor.” Jesus also advised that his followers render to Caesar (the government) what is due to and to God what is due. 

Without a doubt, churches do a lot of good in Lowell, the state of Michigan and our country as a whole. However, in my opinion that does not exempt them from helping to pay for the infrastructure that serves them. Taxing of church real estate will have to be done on a national level, but there is a rising tide of citizens who believe the laws written when times were very, very different than they are now needs to be addressed and changed. I would suggest that a gradual change would be best. Maybe a 50% tax rate for the main church building and any living quarters for the staff, but all property outside of the main building should be taxed at the prevailing percentage. But even that could be done gradually over a period of time like five or seven years. Our infrastructure is a mess and it is time to see that everyone helps to pay for it to be improved and maintained.