Church and State–Vulnerabilities

Separation of church & state – NOT!

Let’s talk about vulnerabilities we might not notice. The U.S. government underwrites our churches in ways that might not last forever. Some are shaky as I write.

Neil Cole, in his book Rising Tides, puts this eloquently. But I can summarize pretty well. Much like the church in Russia before the Soviet Revolution, we are vulnerable to changes in our government in at least three ways, and I’m not talking about freedom of speech.

No Tax on Clergy Housing

I’ve personally benefited from the clergy housing allowance as a government-supplied tax shelter. It enabled me to purchase houses I could not otherwise afford. And we bicycled those houses to an even more significant advantage by buying and remodeling homes in need of repair when we were young and had more energy. Each time we sold, we pulled some money out of the transaction to invest in stocks, then we purchased another home in need of repair—all of this underwritten by the IRS tax code.

The church also benefited wonderfully. Because of the housing allowance, they could pay staff pastors less, which allowed us to grow larger teams.

No Tax on Church Buildings and Land

In Hermosa Beach, California and Kaneohe, Hawaii, we were blessed with properties commanding incredible ocean views—views that would result in much higher property taxes than similar properties lacking the view. But, because of laws written many decades ago, we paid no property tax.

No Tax on Church Income

Every time I visit my favorite restaurant (the one with those golden arches), a few cents get dispersed between city, county, state and federal governments. Business income is taxed while church income is not. Again, the church thrives on a huge benefit. But what if these three evaporated?

BTW, I favor all three subsidies, so don’t get mad at me as if I’m lobbying for their removal. I just think they represent vulnerabilities.

We live in a divided nation, and much of the division hinges on people’s views of religion, not just Christianity but religion in general. All religious entities rely on these benefits. Consider the animosity toward the church and then consider that everyone outside a religious organization pays a little extra tax because of our advantages, and you get the picture.

So, the problem isn’t the benefits, but the possibility that they could go away. While I lived in Hawaii, one governor tried to tax church income, so this is already on the table. It turns out he would have had to tax all non-profits if he came after churches, so he failed. For that reason, this particular benefit would be the last to go if we came under pressure.

But what would happen to your church if you had to pay property taxes? They do in most countries. What about the clergy housing allowance? Would taking that away shrink your staff and programs as much as an applied property tax?

I’ll admit to being a little hypocritical here. I favor these benefits, while I also favor separation of church and state. Again, I’m not lobbying for us to lose them. However, it is time to consider the possibilities, which lead me to several questions:

  1. Do you have deep enough financial reserves to survive an unexpected long-term hit?
  2. How could social media plus the advent of interactive video help you become less dependent on large buildings and drive-to programs and events?
  3. Are you utilizing new technologies for maximum impact? Paul used the mail to a far more significant effect than the rabbis who went before him. The church jumped all over Gutenberg’s invention to a vast cultural advantage. The third radio station built in Los Angeles was owned and operated by a church. Exponential taught me to use Zoom several years before I could see it benefiting our churches—the pandemic caught me up.
  4. What would happen if one of the Covid-19 variants nullified the vaccines which now protect us?
  5. Can your church survive a massive fire if you live in the western United States? Or a hurricane in the south or even the northeast? Would your church still be church if you lost your building to any disaster?

Would you mind taking the time to comment below? It helps generate community and helps guide me toward future blog topics.



6 thoughts on “Church and State–Vulnerabilities”

  1. Thanks for the warning, Ralph. I think you hit the nail on the head.

    Many of the churches that I know (in North America) spend more money and time on the church building than on building up the church (the people). Yes, we have programs to keep the members happy and to keep their kids coming while they’re young, but what are we doing to win the lost to Christ and to develop them as mature reproducing disciples? What are we doing to understand the challenges our children are facing in schools that are hostile to Christianity? What are we doing to equip them with answers to the questions they are facing? And if we are doing anything, is it working? God has called us to bear fruit. Where is the fruit?

    Not only are we failing at evangelizing our communities as we are commanded, we are not even reaching our young people in our churches. The average dropout rate is over 80% when our kids leave the nest. If Christ was really real to them in their lives, they wouldn’t leave.

    With the failure to evangelize and the inexcusable dropout rate, many of our big church buildings will be 80% empty in a generation. Once these properties are taxed (the handwriting is on the wall), they will become ghost buildings, museums, retail outlets, or worse yet, mosques.

    It’s time for us to wake up, take our relationship to Christ and our Christian responsibility seriously. How many people have we won to Christ in the past year? Where are they now?

    If a church doesn’t reach the lost, disciple the new believers and keep its young people, it’s dying. If we don’t have revival in America, the tax man is coming to the churches. If that happens, many of today’s churches will dot the landscape as corpses, as monuments to the “success” we thought we were having.

    Let’s make a difference for Christ.

    1. Well said Bob,
      One thing we should focus on is helping our people bring Jesus into normal, everyday conversation. Church invitations and sales pitches have not served us well. Many feel intimidated by a need to convert people. We’ve detoured from follow me as I follow Christ.

  2. Matt Costantino

    hi Pastor Ralph, I’m not a pastor or even church admin but a practicing chiropractor in Hermosa, and have been a member at Hope for almost 20 years. I enjoy your blogs and podcasts!

    off topic but wanted to let you know I asked my uber driver the question you said you start with: “what do you think about God?” and it started a conversation and we prayed together in front of my house.

    I”m alway s looking for ways to break the ice and I think it’s a great one!

    Blessings to you and your family


  3. Well, someone has to jump in here….
    The tax benefits for Church’s are too valuable & help maintain (what’s left) of a Christian values topography on our country, and to lose that would be devastating. There is constant change on this subject & I understand the reticence to comment, but here’s what I miss that’s already gone: Seeing some stores closed on Sundays as reminders to go rest. I miss seeing marriages work. I’m not a Church Pastor but a Disability Coordinator at a large high school, and the majority of troubled teens sent my way come from broken homes. So did I, and we didn’t go to Church, I only happened to come across a Hope Chapel in my community in the 90s, by way of a girl (funny how God does that with us spacey dudes).

    I would like to not miss the toxicity of our politics and how it’s poisoned our Faith and has given rise to some elected officials who would like to tax Churches in response. I recently re-watched on c-span the 2000 VP Debate between Dick Cheney & Joe Lieberman and wonder how we can get back to that level of graciousness.

    I’d like to see Chapel’s allowed in our schools, in the same way we have Prison & Military Chapel’s-those don’t seem to violate the Constitution, but public schools sure are off limits. For the time being though, I’m happy to quietly Pray with some of my families before everyone shows up to meetings and outside of work, speak out against any attempts to tax our Church’s but know that unless we all manage to inject kindness & humility into our civil discourses, then there’s all kinds of bad places we could end up.

    1. We’ve indeed lost a lot of position, stature and freedom. Now finances may be affected. However, the church has historically grown the fastest when it was denied much of what we enjoy even now. The good news is that Jesus isn’t going anywhere and the gates of hell still won’t prevail against his church. One caveat is that we sometimes build things a little differently than he does. Staying in alignment is serious stuff.

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